As liquidity drips back into the system and the logjam clears, GPs look to move on from a challenging 2024 for fundraising
GPs with funds in market are hopeful that their prospects in 2025 will improve after another difficult year, as noted in part one of this series, Private capital fundraising: challenging 2024 hints at areas for growth in 2025.
In this, the second part of our Fundraising Primer series, the focus is on the key trends from the 2024 data. This short report explores the extent of fundraising consolidation, the outlook for first-time funds, and what GPs have done to ease LP liquidity pain, as well as insight from industry experts.
In 2024, there was no 'big bang' of deal activity. While the best deals were still getting done, they took longer to materialize, and companies that couldn't demonstrate best-in-class performance for their assets struggled to close deals. This slowdown in M&A activity impacted distributions for LPs and contributed to weaker fundraising momentum for some funds.
Jan Philipp Schmitz, Executive Vice-President, Head of Investor Relations, and Deputy Co-Head of Secondaries & Primaries at Ardian
➔ At a glance: Buyout deal value up but no ‘big bang’ of deal activity
Number of global private capital deals
2024: 32,107
2023: 36,949
🡻 Year on year: -13.1%
Global aggregate private capital deal value
2024: $1.31tn
2023: $1.32tn
🡻 Year on year: -0.6%
Number of global buyout deals
2024: 7,496
2023: 8,501
🡻 Year over year: -11.8%
Global aggregate buyout deal value
2024: $503bn
2023: $465bn
🡹 Year over year: 8.1%
LPs stick with market leaders in 2024
Our Primer in September looked at the connection between performance and fundraising success. One of the key trends was consolidation, whereby a decade-high percentage of LP commitments were allocated to the best-known GPs in the industry. Year-end data now shows the complete picture of this trend.
➝ In 2024, 50.6% of committed capital went to the 100 biggest funds by aggregate capital raised at final close.1 This contrasts with the market-high year of 2021 when 33.9% of commitments went to the biggest 100 funds (Fig. 1).
➝ At the other end of the fund size scale, just 24.7% of commitments landed in the long tail of (almost 2,900) smaller funds that fell outside the top 300 in 2024, compared with 46.4% in 2021.
➝ Year-on-year fundraising consolidation did not change significantly between 2023 and 2024, with the 100 largest funds getting 51.2% of capital in 2023 and 50.6% in 2024.
➝ For 2014 to 2024, the biggest 50 funds took on average 22% of commitments and the next 50 largest just 8% (Fig. 2).
Fig. 1: The number of funds closed fell in 2024, but the consolidation of capital raised is consistent with 2023
Aggregate capital raised across all private capital funds by fund size
Source: Preqin
Fig. 2: Fundraising consolidation is acute in 2024 compared with the decade average
10-year average proportion (top) of aggregate capital raised by fund size vs 2024 (bottom)
Source: Preqin
While recent fundraising consolidation has put pressure on well-seasoned small and mid-sized funds, the number of first-time funds has also fallen to a 10-year low in 2024, down 71% from the 2017 high (Fig. 3).
➝ In 2017, 796 first-time funds were closed in APAC, falling to 94 in 2024.
➝ The number of North America-based first-time funds fell from 557 in 2021 to 187 in 2024.
➝ Aggregate capital raised by first-time funds fell from $271bn in 2018 to $41bn in 2024.
Fig. 3: The number of first-time funds in APAC falls dramatically amid global decline
Number of first-time private capital funds closed, and aggregate capital raised
Source: Preqin Pro
What GPs have done to ease LP liquidity pain
With both the number of funds closed globally and capital committed by LPs down on 2023, GPs are increasingly turning to creative liquidity solutions, like continuation funds, to ease the squeeze. In 2024, the total number of continuation funds hit 70, up from the previous record of 57 in 2023.
➝ The aggregate capital raised in 2024 of $37.9bn almost matched the $38bn raised in 2021 (Fig. 4).
➝ The proportion of multi-asset and single-asset transactions in 2024 is roughly equal, with a 33 to 37 split.
Secondaries have boomed in recent years (Fig. 5). This is intended ‘to help GPs grow unicorns’ on behalf of secondaries funds while providing much-needed liquidity to LPs that had invested on a primary basis, Joseph Smith, Co-Head of the Private Equity Funds Group at Schulte Roth & Zabel, said in our continuation funds blog.
Fig. 4: The record for total number of continuation funds closed was broken again in 2024
Continuation funds closed by multi-asset and single-asset funds and aggregate capital raised
Source: Preqin Pro
Fig. 5: Aggregate capital for secondaries in 2024 is higher than in 2021
Number of private equity secondaries funds closed, and aggregate capital raised
Source: Preqin Pro
Fundraising in 2024 showed signs of getting better. I don’t think it’s back to normal [and] there’s still not much room for new managers – at least one big US state pension plan told us they hadn’t committed to a new manager in three years.
But if you talk to mid-market funds they say, 'flat is the new up'. As in, if they get their prior commitments back that’s great. That said, we spoke to some managers last year that were reasonably successful in getting new commitments – something in the range of 10% to 20% of the fund came from new commitments. So, 2024 wasn’t a total desert.
I think [2025] is going to be a lot better for a number of reasons, one being the amount of secondary activity that’s freed up some capacity for recycling capital. There's also clearly a lot of private credit funds looking to deploy capital. That market has gotten very competitive, so that should help the buyout debt packages get more attractive and break up the logjam of deal activity.
A US-based placement agent
1. To test consolidation in fundraising, we carved the fundraising landscape into five buckets by fund size: the biggest 1-50 funds; 51-100; 101-200; 2001-300; 301-all and looked back at the natural migration of capital to the bigger managers over the decade.
➔ About Primers.
Preqin Primers are a series of short reports on the major trends shaping the alternative investment industry.
They combine key stats from Preqin Pro with the views of fund managers, investors, and service providers.
If you'd like to connect with our research team to share data or learn more about our methodology, please get in contact here.
The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin accepts no liability for any decisions taken in relation to the above.