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The Regional Breakdown of US-Based Private Equity Fund Managers (Part II) – October 2014

by Kathryn Sharpe

  • 21 Oct 2014
  • PE

The first part in this blog series considered the strengths of the northern US regions in terms of fundraising, with an emphasis on certain individual states dominating others. Attention will now shift to the southern states, where the graphic clearly illustrates a disparity in the region’s ability to attract capital in comparison to the northern territories. 

Despite the South East possessing a larger number of fund managers than the South West (368 compared to 315), it nevertheless lags behind in its fundraising efforts. Over the last 10 years the South West has accumulated $139.4bn in aggregate capital commitments, representing more than double the amount raised in the South East. The amount of dry powder, $35.8bn, also outstrips the $20.1bn currently available in the South West. Explaining these regional disparities is aided by an examination of the contribution individual states make to overall fundraising performance. 

Historically, the South US was an agricultural economy but over time it has gradually enjoyed greater diversification. In some states this has included an increased focus on oil & gas, which has been the case in Texas – the leader in US crude oil production. This has been capitalized on by private equity fund managers, as reflected by the fundraising success for this sector in the region. 

Texas eclipses all south-western and south-eastern states in terms of number of firms, with 260 based in the Lone Star State. In contrast, Florida, the state with the second highest number of fund managers, has 94, which only emphasizes Texan supremacy. The state derives 72% of investor commitments from vehicles targeting oil & gas opportunities, totalling $53.8bn gathered over the previous decade. The first blog in this series revealed that California was responsible for the overall success of western fundraising; the strength of Texas suggests this trend is similarly reflected across the South. 

A regional breakdown of the US states, therefore, clearly demonstrates that sectors are often led by individual states in fundraising efforts. There is an apparent overall northern dominance led by New York and California, but the South is aided by an abundance of natural resources in certain states, such as Texas, which continues to attract fund manager capital.

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