The October issue of Preqin’s Private Equity Spotlight highlights the latest trends in North America-focused fundraising statistics. The US is seen as a world leader, but the uneven distribution of US-based private equity firms in relation to their headquarters suggests certain localities overshadow the fundraising efforts of others. This blog will examine the breakdown of fund managers across all states to explore regional differences; part one will concentrate on northeastern and western strengths, while part two will focus on the current state of the southern regions.
According to Preqin’s Fund Manager Profiles online service, there are currently 3,933 firms situated in the US. Thirty-nine percent of these firms are based in the North East, with a further 29% in the West. The statistics indicate these two coasts far surpass other regions, particularly when compared to the 368 and 315 firms located in the South East and South West respectively. This hints that the South is struggling to attract capital when compared to its northern counterparts.
This argument is further supported when analyzing the total amount of capital raised from private equity funds in the last 10 years by each US region, as represented in the graphic below.
The North East has accumulated the most capital with a total of $1.4tn, followed by the West with $464bn. The notable difference between these two regions in terms of funds raised could be attributed to the West Coast’s association with venture capital funds, which typically close vehicles on smaller amounts. New York and California are the two biggest players in the US, representing 19% and 10% of the total funds raised in the US in the last 10 years respectively. It is important to note that in the West, California is a major contributor to the total funds raised in the region. Over the last 10 years it has accumulated $432bn in total capital commitments, 93% of the western region’s total, and 27 times more capital than the next largest state in the region for private equity fundraising, Colorado.
The largest firm in the North East is Carlyle Group, which focuses on buyout, growth, mezzanine, natural resources and special situations, while in the West, Hellman & Friedman is the largest firm, courtesy of its investment strategy of buyout and restructuring.
Given that the north-eastern and western regions overshadow the remainder of the US private equity landscape, the second part in this blog series will examine the role of the South to further analyze regional differences.