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Hedge fund performance stumbled in June 2018, as the Preqin All-Strategies Hedge Fund benchmark recorded losses of 0.50%. This was the third month of 2018 so far to see negative performance, although YTD returns remain positive at 0.82%. Macro and event driven strategies funds were the only top-level strategies to see gains for the month.
Tail-end private capital funds hold $593bn in total assets, including $525bn in unrealized value as at December 2017. This accounts for over 10% of the total assets held by the industry, which reached $5.22tn as of the same point.
The Q2 2018 Preqin Private Capital Fundraising Update looks at fundraising activity for the quarter across the industry as a whole, and in each individual asset class. It also examines the state of the fundraising market going into Q3 2018.
There were 1,149 private equity-backed buyout deals announced in Q2, worth a combined $118bn, putting the quarter on par with Q1 levels. Healthcare accounted for 12% of deals announced, but almost a quarter of deal value – a significant increase from just 4% of deal value it accounted for in Q1.
Driven by unprecedented deal-making for China-based companies, Q2 2018 saw 3,686 venture capital deals announced worth a combined $74bn – a record high for aggregate deal value. Venture capital-backed exits also saw a record quarter, with the $16bn sale of Flipkart leading exit activity.
In Q2 2018 there were 569 infrastructure deals worth $49bn – a record low in aggregate deal value for the industry. In fact, this is the first quarter over the past five years that has seen deal value fail to reach $55bn. Deal activity in Europe was primarily responsible for the slowdown, as deal value fell sharply from Q1.
Europe-based hedge fund managers hold €587bn in AUM as of March 2018, as assets have increased by almost 10% in 2017 alone. This has been driven by strong inflows, with the majority of European fund managers seeing net inflows in 2017, as well as robust long-term performance compared to public indices.
Unlisted natural resources funds have typically underperformed compared to other private capital asset classes. However, over the longer term performance has improved, and among 2015 vintage funds natural resources vehicles have a median IRR of 14%, higher than any other private capital strategy.
A Preqin/NXT Capital survey finds that private debt investors are flocking to US lower-middle-market direct lending funds in anticipation of a potential market correction. They believe the sector will be less affected by a cycle, while offering returns above the average for the asset class.
The Preqin All-Strategies Hedge Fund benchmark posted positive returns of 0.49% in May. Event driven strategies were the highest-performing top-level strategy, while credit strategies and multi-strategy vehicles suffered losses.
The ‘Billion Dollar Club’, comprising those investors which allocate $1bn or more to the asset class, has grown to 359 members in 2018. In total, they have $1.54tn allocated to the asset class, equivalent to 52% of the $2.97tn in assets held by the industry. Almost all investor types in the Club saw double-digit percentage point growth in their allocations over the past 12 months.
Private real estate funds with a broader geographic scope tend to be larger and raise capital more successfully. However, funds which focus on a single country still comprise three-quarters of all fund closures, and have higher median net IRRs than their continental or multi-continental counterparts.
2018 shows promising signs that the private debt market in Asia may be showing incipient growth. More than 900 investors globally have a stated preference for Asia-focused private debt funds, and 30% of investors surveyed at the end of 2017 said they thought Asia represented the best opportunities in 2018.
Emerging markets-focused private equity funds have seen their average returns improve among vehicles with more recent vintages. Among 2014 and 2015 vintage funds, emerging markets-focused vehicles now have higher average IRRs than funds focused on North America, although they also have a higher variation in returns.
The Billion Dollar Club, those hedge fund investors which allocate $1bn or more to the asset class, now invests a combined $889bn in the industry. This is up 11% over the past 12 months, and accounts for one out of every four dollars invested in hedge funds, even as average allocations from these investors are falling.
Since 2008, wind power has accounted for the largest proportion of the number of renewable energy deals transacted globally. However, the proportion of deals made in solar power has steadily been growing, and in 2018 YTD they accounted for over half of renewable energy deals, outpacing wind power for the first time.
Hedge funds recorded net inflows of $17bn in Q1 2018, continuing a streak of five consecutive quarterly inflows, and pushing total industry assets to $3.6tn. Despite negative performance in February and March, CTAs saw the largest net inflows of any leading strategy in Q1 2018, totalling $13bn.
The Preqin All-Strategies Hedge Fund Benchmark returned +0.91% in April, recovering from losses in March. All top-level strategies generated positive returns, as did CTAs and funds of hedge funds. Liquid alternatives struggled in comparison, failing to generate positive returns for the third consecutive month.
Since the start of 2017, venture capital fundraising in emerging regions has largely centred around early-stage and seed vehicles. In Latin America, they account for 63% of aggregate venture capital raised in the region and 67% in MENA. In 2017, three out of the four largest funds closed in emerging regions were early-stage vehicles.
Although investor interest in distressed debt outstrips all other private debt fund types, fundraising has slumped in 2018, with just three distressed debt funds having reached a final close as of the end of April. Furthermore, funds in market are seeking $36bn, less than half of the $77bn sought by direct lending vehicles.
With online retailers taking an ever-larger share of consumer spending, just 13% of real estate investors think retail assets present the best opportunity in the current market. However, deal value for retail assets almost doubled from 2013 to 2015, and has remained steady since, while fundraising has also stayed strong.
Despite concerns about pricing and future returns, 92% of investors intend to commit as much or more capital to private equity in 2018 as in the previous year. Investors seem to be targeting core private equity strategies, with greater proportions seeking investments in buyout, venture capital and growth funds, while interest in funds of funds and secondaries has fallen.
Although hedge funds posted strong returns in Q4 2017, the opening quarter of 2018 has seen wide swings in monthly performance and year-to-date gains stand at just 0.35% as of the end of March. Credit strategies are the only approach to see gains in all three months, and ended Q1 as the best-performing strategy.
From Q1 2017 to Q1 2018, the appeal of higher-risk private debt strategies has grown, with the greatest proportion of investors now showing a preference for distressed debt. This shift comes at a time when many investors think that equity markets are hitting the peak of their cycle, and that a market correction is likely.
A total of 1,403 private equity real estate deals were announced in Q1 2018, worth an aggregate $67bn. Although this is a decrease from Q4 2017, Q1 2018 represents a five-year high for deal activity in an opening quarter, both in terms of the number of deals and their aggregate value.
The assets held by sovereign wealth funds have grown year-on-year since 2009, but the rate of growth has slowed in recent years. However, in the year to March 2018 assets surged by 13%, and 71% of sovereign wealth funds saw their AUM grow. The investor class now manages a record $7.45tn globally.
The Preqin All-Strategies Hedge Fund benchmark returned -0.63% in March, its second consecutive month of losses. Credit strategies were the only top-level approach to see positive returns, posting 0.15% for the month. Despite this, the industry has made overall gains of 0.35% in Q1, and 8.02% over the past 12 months.
Since 2013, the value of private equity real estate deals in Asia has grown 3.3x, while the global market has grown 1.2x. In fact, deal value in the region doubled from 2016 to 2017, reaching a new record of $27bn. Activity has been focused on China and Hong Kong, and two-thirds of capital has come from domestic buyers.
Following a record year for the private capital secondary market in 2017, fund managers are optimistic for the year ahead. The largest proportion expect the total value of secondary transactions to reach $45bn or more in 2018, and the majority expect to invest more in the year ahead than they did in 2017.
Hedge fund managers are more optimistic going into 2018, after 2017 saw improved performance and a return to net inflows. Fewer fund managers reported an increase in fundraising challenges compared to the year before, and greater proportions reported that their funds had met or exceeded return goals compared to 2016’s survey.
The Q1 2018 Preqin Private Capital Fundraising Update looks at fundraising activity for the quarter across the industry as a whole, and in each individual asset class. It also examines the state of the fundraising market going into Q2 2018.
There were 1,023 private equity-backed buyout deals announced in Q1 2018, worth a combined $116bn – the strongest Q1 on record. Twenty-four deals were announced worth $1bn or more through the quarter, accounting for $94bn or 81% of the aggregate total. By contrast, the quarter saw 354 exits worth $52bn, a dip from Q4 2017.
The first quarter of 2018 saw 3,269 venture capital deals announced worth a combined $51bn – the largest transaction value of any first quarter, surpassing the previous record of $41bn in Q1 2016. With the exception of venture debt deals, the average value of venture capital deals increased across each investment stage.
In Q1 2018 there were 564 infrastructure deals announced, worth a combined $61bn. This marks a significant decrease from Q1 2017, which saw 676 deals announced worth $106bn. Q1 2018 also saw a continued shift towards larger deals of $1bn or more: they comprised 14% of the number of deals, up from 11% seen through 2017.
The unlisted infrastructure industry saw record-breaking fundraising in 2016 and 2017. However, the expansion of the industry has brought about significant challenges – 81% of fund managers report an increase in the level of competition for investment opportunities compared to 12 months ago.
Institutional investors now have more than $2tn invested in hedge funds, and more than 5,250 institutions actively invest in the asset class. But just three investor types – public and private pensions and sovereign wealth funds – account for half of all institutional capital invested, despite representing just a quarter of investors.
High asset valuations have become a key concern for venture capital fund managers: over half of firms surveyed at the end of 2017 reported seeing an increase in pricing for portfolio companies over the past 12 months. Managers also saw more competition for assets and investor capital, a reflection of the crowded marketplace.
The Preqin All-Strategies Hedge Fund benchmark's positive streak came to an end in February, with hedge funds recording their first negative month since October 2016. Funds posted overall losses of 0.80%, with CTAs and funds of CTAs the hardest hit.
Almost half of private debt investors cite valuations at the top of the list of challenges facing the industry, while 70% believe there is more competition for deal-making opportunities. However, over three-quarters of fund managers find that investor appetite for private debt has increased over the past year.
Sixteen information technology-focused buyout funds closed in 2017, raising $40bn – more than twice the previous record of $17bn seen in 2013. At the same time, deals in information technology account for a rising proportion of buyout-backed deal numbers, comprising 23% of 2018 YTD deal activity.
Preqin’s latest survey of private real estate fund managers finds that they have seen higher asset pricing and stiffer competition over the past year, and most say it is harder to find attractive deal opportunities as a result. However, managers have seen investor appetite increase further over the past 12 months, and most believe the industry will keep growing through 2018.
Drawing on data compiled for its 2018 Global Hedge Fund Report, Preqin has created league tables of the most consistent performing hedge funds over the past five years. The rankings track funds’ consistency across four metrics: annualized return, annualized volatility, Sharpe ratio and Sortino ratio.
Seventy percent of natural resources fund managers plan to deploy more capital in 2018. For the asset class overall, 21% of managers report that it is more difficult to find attractive investment opportunities compared to 12 months ago. However, these proportions vary widely according to strategy.
Real estate funds of the most recent vintages have outperformed all other private capital asset classes. As a result, 88% of investors feel their real estate investments met or exceeded their expectations in 2017. However, there are concerns that the industry will not be able to sustain this level of performance, and a quarter of investors expect performance to be worse in 2018.
The private debt industry has seen a steady increase in the number of active investors in recent years. In particular, Asia-based institutions have become an increasingly prominent part of the investor universe, and the number of investors from Asian economies has risen sharply in 2017.
Four-fifths of investors invest in alternative assets, and over half invest in three or more asset classes. Investors reported greatest satisfaction with infrastructure and private equity, however the greatest proportion are looking to allocate to infrastructure and private debt. Although alternative assets had a banner year in 2017, investors are finding it difficult to source attractive investments.
The private capital secondary market had a banner year in 2017, as record fundraising was matched by record transaction activity. Secondary buyers are increasingly targeting alternative transaction types. However, competition is rising, and buyers said that pricing was higher in 2017 than the year before.
Half of hedge fund investors believe that public equity markets are either at a peak or in a recession phase. As such, the largest proportion since December 2013 is looking to allocate more capital to hedge funds, as they align their portfolios defensively.
Preqin’s year-end survey of private equity fund managers finds that high pricing is impacting performance expectations. While most managers remain confident in their ability to deliver returns, a third now plan to reduce the targeted returns of their upcoming funds due to valuations concerns.
Preqin’s year-end survey finds that four out of 10 alternative investment consultants feel private debt has outperformed their expectations in 2017 – the highest proportion of any asset class. As a result, the majority recommend that investors increase their allocations to private debt in 2018.
The unlisted infrastructure industry in North America is well-placed to respond to the recently announced framework for the US Government infrastructure plan. Funds focused on the region celebrated their second consecutive record-breaking year in 2017, with unprecedented levels of both fundraising and deal making activity.
The Preqin All-Strategies Hedge Fund benchmark generated returns of 2.18% in January – the strongest start to a calendar year since 2013. All leading strategies and regions posted positive performance for the month, the sixteenth consecutive one in which the industry has recorded overall gains.
As the private equity industry has seen an unprecedented period of fundraising, first-time fundraising has maintained stable levels. Despite investors increasing their allocations to the asset class, many are choosing to recommit to established fund managers, and so debut funds are accounting for a falling proportion of activity.
2017 saw record private equity real estate deal value, with 5,191 deals announced worth $287bn. North America was the only region to see declining deal levels: Europe saw record deal activity and deal value in Asia doubled from the previous year.
The hedge fund industry produced positive returns in every month of 2017, gaining 11.41% across the year. Stronger performance has improved investor confidence, prompting four quarters of net inflows totalling almost $50bn across the year. This in turn has helped push industry AUM to a new record of $3.55tn.
The private debt industry has tripled in size since the end of 2007, reaching $638bn in assets as of the end of June 2017. Although the net flow of capital to investors has been negative in 2015 and 2016, each year saw more than $90bn in distributions, and H1 2017 alone recorded a further $71bn in capital returned.
As of the end of June 2017, private equity assets have reached a new record of $2.38tn, as the industry grew by almost 10% in six months. However, while 2016 saw more than half a trillion dollars distributed to investors, in H1 2017 funds returned $233bn – a significant sum, but behind 2016’s pace.
While 2016 saw a record $100bn in net capital flow to investors, 2017 is failing to match that pace. Distributions in H1 2017 were nonetheless high at $84bn, and investors remain satisfied with the performance of the asset class. Eighty-four percent intend to maintain or increase their commitments from 2017 to 2018.
The infrastructure industry has tripled in size since 2009, with AUM reaching a record of $418bn as of June 2017. Fundraising surpassed $65bn, driving dry powder past $150bn for the first time. Given these successes, it is unsurprising that 93% of investors feel their investments have met or exceeded expectations in 2017.
The unlisted natural resources industry has returned record levels of capital to investors since the start of 2016: $77bn in that year, and a further $48bn in the first half of 2017. Despite strong distributions and performance, 19% of investors plan to commit less capital in 2018, greater than the 11% looking to commit more.
As the private equity market has swelled, fund managers have been matching and exceeding their target sizes with increasing frequency. In fact, growing proportions of private equity funds are reaching or surpassing their stated hard caps, with over half of funds closed in 2015-17 meeting or exceeding their hard caps.
Hedge funds recorded 12 positive performance months in 2017, the first time the Preqin All-Strategies Hedge Fund benchmark has seen a calendar year of gains. This consistent performance pushed the industry to its highest annual return since 2013, as funds returned 11.41% through the year.
The 2017 Preqin Private Capital Fundraising Update looks at fundraising activity for the year across the industry as a whole, and in each individual asset class. It also examines the state of the fundraising market going into 2018.
2017 saw 4,191 private equity-backed buyout deals announced, worth a combined $347bn. This is broadly on par with the $340bn in deals announced in 2016. Asia marked a banner year, as two record-setting acquisitions pushed total deal value to $63bn. However, exit activity fell for the third consecutive year, totalling $250bn.
2017 was a record year for venture capital-backed deals, with 11,144 deals announced worth an aggregate $182bn. This surpasses the previous record of $148bn set in 2015, but does not approach the number of deals made in that year. Venture capital-backed exits also saw a slight uptick, as 1,151 exits were made for total of $71bn.
A total of 2,378 infrastructure deals were completed in 2017, worth a combined $337bn. While this is on par with the number of deals announced in 2016, aggregate value has fallen sharply. Activity in Europe and North America rose from the previous year, but Asia saw a significant decline.
In recent years there has been a sharp rise in the number of venture capital-backed companies achieving unicorn status, with 276 firms achieving valuations of $1bn or more since 2013. While unicorns make up just 2% of the number of venture capital deals, they account for 37% of total venture capital deal value in 2017 YTD.
The Preqin All-Strategies Hedge Fund benchmark generated incremental gains in November of 0.40%, making it the thirteenth consecutive month of positive returns. This has helped increase the year-to-date figure to 9.93%, cementing the expectation that it will be the best annual performance for hedge funds since 2013.
The average management fee charged by private debt funds has fallen to a 10-year low among 2017 vintage funds, with a median of 1.50% and a mean of 1.52%. However, there is a lot of variation in fees between different debt types, and for some strategies average fees remain significantly above this level.
First-time venture capital funds have posted higher median net IRRs than their established peers in eight of the past 10 vintage years. This outperformance may help explain the large number of first-time venture capital funds in market, which has increased by 26% over the 12 months to the end of September 2017.
Pricing volatility in currency and energy markets has created a challenging performance environment for CTAs in 2017 so far. As at the end of September, the Preqin All-Strategies CTA benchmark has recorded year-to-date losses of 0.04%, compared to gains of 8.04% for the All-Strategies Hedge Fund benchmark.
The India-based private equity market has seen a considerable expansion in its assets under management in recent years, growing from $6bn as of the end of 2006 to $24bn at the end of 2016. 2017 YTD has seen a record number of fund closures, and the pace of new funds coming to market is accelerating.
Core and core-plus funds account for the majority of the unlisted infrastructure market, with over a quarter of a trillion dollars in combined assets. However, higher-risk approaches such as value added funds account for an increasing portion of the market, having shown more aggressive growth in AUM in recent years.
Hedge funds recorded positive net asset inflows of $19.2bn in Q3 2017, bringing year-to-date net inflows to $43.9bn. Credit strategies and multi-strategy funds experienced the greatest net inflows, while macro strategies, CTAs and relative value strategies all saw net outflows through the quarter.
Hedge funds generated 1.15% in October, the twelfth consecutive month of positive returns. With year-to-date returns climbing to 9.30%, the hedge fund industry remains on track to generate its best performance since 2013.
Women make up an average of 21% of staff at venture capital funds. This proportion falls to 11% of senior staff, and just 6% of board members at venture capital firms. However, women-owned funds are securing more capital and making more deals in 2017.
The number of new private capital firms being founded each year decreased in the wake of the Global Financial Crisis. However, in recent years the growth in the number of active firms has rebounded: there are now 7,500 active private capital firms worldwide, employing almost 200,000 members of staff.
Private equity fund of funds managers have been exploring new avenues to appeal to investors and attract capital. For example, many have shown interest in investing in first-time funds, as well as differentiating themselves from other firms by making greater use of alternative investment methods.
Despite bigger private real estate funds attracting large amounts of investor capital, smaller funds have generated higher average returns, and are consistently outperforming mid-size and larger funds. Although smaller funds post higher average returns, they do so with greater volatility and a greater spread of performance.
Just 13 Asia-focused distressed debt funds have closed in the past decade. However, in October 2017 there are six funds raising capital to acquire distressed assets in the region. This could be due to burgeoning concerns about debt levels in India and China.
Private capital firms have been expanding over the past year: the majority added to their headcount from 2016 to 2017, and this trend looks set to continue in the year ahead. In order to attract top talent, almost four out of five firms increased their base salaries from 2016 to 2017, and 68% intend to raise them from 2017 to 2018.
Over the past decade, the fund of hedge funds industry has seen assets under management decline to $798bn in June 2017, as investors have increasingly favoured investing directly themselves. In order to combat the challenging environment, fund of hedge funds managers have increasingly turned to M&A activity.
Q3 2017 saw 1,170 private equity real estate deals announced, worth a combined $56bn. This represents a further uptick in deal volumes from Q2, but a decrease in overall deal values. Residential and hotel assets saw significant increases in their share of deal values, while industrial and retail assets continue to diminish.
The Preqin All-Strategies Hedge Fund benchmark returned 1.43% in September, the highest monthly gain since January, as all top-level strategies saw positive performance. Year-to-date returns now stand at 8.28%, the highest performance the industry has seen at this stage of the year since 2013.
Preqin’s latest overview of women in alternative assets finds that just under one in five employees at fund management firms are female. This rate varies widely by role, and consistently declines according to seniority, with the average proportion of women among senior staff at 11% across the alternative assets industry.
Six private capital secondaries funds closed in Q3, securing $5.4bn. 2017 has now seen 25 secondaries funds raise a total of $29bn, matching the previous full-year fundraising record for secondaries funds set in 2014. Additionally, the industry is continuing to diversify and specialize.
In this update covering Q3 2017, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q4.
The venture capital-backed deal industry has registered a second consecutive record-breaking quarter, as 2,362 deals were announced worth a combined $49bn. Deal activity in the first three quarters of 2017 is at $128bn, and the year is on course to see an all-time high even as the number of transactions continues to decline.
The infrastructure deals market saw 365 deals announced in Q3, worth $88bn. While aggregate deal value has rebounded from Q2, the number of deals announced has continued to fall. As a whole, Q1-Q3 2017 has marked a significant slowdown compared to the same period the previous year.
The private equity-backed deals market remained strong in Q3, with 953 deals announced worth $92bn; it looks as though 2017 is on course to see deal activity on par with that of 2016. While North America did see decreased deal activity, the quarter marked the largest ever private equity buyout deal in Asia.
Almost half of hedge fund investors reported in June that they were planning on reducing their allocations in the next 12 months, primarily due to underwhelming three-year performance. When making new investments, investors are faced with nearly 15,000 hedge funds with widely varying returns within and between leading strategies.
Since 2013, emerging infrastructure fund managers have struggled to raise capital and the number of emerging funds closed annually has fallen 50% from 2013 to 2016. At the same time, the disparity between the average size of funds raised by emerging managers and established managers has steadily increased.
Preqin’s latest survey of hedge fund investors finds that the proportion that feel their portfolios have met expectations has doubled in the past 12 months. However, investor concerns have not entirely subsided and almost half now say they intend to reduce their allocation to the asset class.
Preqin’s Real Estate Top 100 report finds that in the last decade, the 100 largest private real estate fund managers have collectively secured 62% of all fundraising for the asset class. The 20 largest funds alone have secured almost $150bn in investor capital.
Asia-focused buyout funds are set to mark a record year in 2017. Fundraising has reached $23bn as of August, and is on course to surpass the record $24bn raised in 2014. However, other sectors of the industry have not kept pace, and buyout deal activity has slumped in recent years.
Investors based in Australia and New Zealand allocate to private equity at a rate almost 20 percentage points below the global average, instead favouring allocations to real estate and real assets funds. This trend is mirrored by the distribution of assets held by fund managers in the two countries.
Private equity buyout funds have returned more than 10% on average in every vintage year since 2006, and the spread of performance is among the smallest of any segment of the industry. With assets totalling $1.49tn, they now account for over half the global private equity industry.
The Preqin All-Strategies Hedge Fund benchmark returned 0.97% in August, increasing its run of positive performance to 10 consecutive months. All leading strategies made gains, with equity and macro strategies funds each returning 1.07% for the month.
Preqin’s survey of private real estate fund managers gauges their predictions for the industry in 2020. It finds that firms expect industry assets and their own ranks to expand, but many forecast that there will be some consolidation over the next three years.
Preqin’s latest survey of institutional investors in alternative assets finds that they are generally satisfied with the performance of their portfolios over the past 12 months. However, across all closed-end private capital asset classes, investors have raised concerns over high asset valuations.
Preqin’s 2017 Alternative Assets Performance Monitor finds that the industry reached a record $7.8tn in AUM as of the end of 2016. The report also examines horizon returns, public market equivalents, and top performing funds and firms across each alternative asset class.
Preqin’s H2 2017 Real Estate Fund Manager Outlook finds that firms are adapting their approach in response to increased pressure on the dealmaking environment. Three-quarters of fund managers say it is more difficult to find attractive investment opportunities compared to last year, and over a third are reviewing more opportunities.
Asia marked a record quarter in Q2 2017, as $47bn in venture capital deals were announced. Overall, the region accounts for almost half of global activity in 2017 so far. However, fundraising and exit activity is not keeping pace, with momentum slowing in these parts of the investment cycle.
Hedge funds recorded positive asset inflows in Q2 2017 totalling $5.0bn, but this did not approach the $19.7bn inflows seen in Q1. Additionally, capital flows were not even across the industry: while CTAs saw the greatest net inflows in Q2, equity strategies funds recorded their sixth consecutive quarter of outflows.
Net inflows to hedge funds totalled $25bn in H1 2017, and the industry recorded its highest H1 performance since 2009. However, fund managers predict net asset flows will be flat or negative in H2 2017, and believe that investor sentiment is more negative than it was 12 months ago.
Renewed focus on infrastructure projects in North America has benefitted the unlisted infrastructure market in the region. Already the largest infrastructure market in the world, 2016 was a record year for North America and 2017 seems to be on path to continue last year’s momentum.
The majority of private equity fund managers have seen increased investor appetite for the asset class in the past 12 months. However, growth in investor interest is matched by the growing number of funds seeking capital, and fund managers are therefore seeing more competition for fundraising.
Investors view mezzanine funds as one of the most promising areas of the private debt market, leading to increased fundraising for the fund type in recent quarters. While 2016 saw a record year for mezzanine fundraising, it does not seem as though 2017 will match that total, and the number of funds in market is in decline.
The result of the UK-EU referendum has created an uncertain future for the private real estate market in the UK. Deal flow in the country has declined while activity in the rest of Europe has increased over the past 12 months.
Venture capital fund managers do not feel that it is becoming more difficult for them to source deals in 2017, despite a climate of increasing competition. Almost half of fund managers surveyed by Preqin agree that there is greater competition for deals compared to 12 months ago, but firms remain confident in their ability to source attractive investment opportunities.
Preqin’s inaugural Natural Resources Top 100 report examines the largest fund managers and investors active in the asset class in 2017. The biggest firms account for four-fifths of fundraising over the past decade, while the biggest investors have over $100bn allocated to natural resources investments.
Investors based in Asia-Pacific have allocated more capital to hedge funds in recent years, reaching a record $202bn as of the end of 2016. The majority of capital invested in hedge funds by Asia-Pacific-based investors comes from sovereign wealth funds, while some investors made their first investments in hedge funds in 2016.
The closure of Apollo Investment Fund IX, which has become the largest ever private equity fund at $24.7bn, brings total private equity fundraising in the first seven months of 2017 to $269bn. Two of the top 10 largest ever private equity funds have now closed within the past two months.
The 2017 Preqin Private Capital Fund Terms Advisor finds that several private capital fund types are raising their management fees. Buyout, real estate and infrastructure funds have all seen 2017 vintage funds and those currently in market charge higher mean fees than funds of previous vintages.
Fundraising for private capital secondary vehicles slowed sharply in Q2 2017, following record activity seen the previous quarter. However, collectively H1 2017 has seen secondary funds raise almost four-fifths of the record capital total marked in 2014, putting this year on course to be the largest ever for secondaries funds.
The private equity real estate industry saw 887 deals recorded in the second quarter of 2017 worth a combined $63bn, a significant uptick from the slow activity recorded in the previous quarter. Larger assets drove activity, accounting for almost one in five transactions in Q2, and more than half of total deal value.
The hedge fund industry continued its recent run of consistent gains in June, returning 0.57% for the month. This has pushed 2017 YTD returns to 4.87%, the highest H1 performance since the first half of 2009. It is also the first time since 2007 in which the first six months of the year have all recorded positive returns.
The assets held by private equity funds focusing on investments in emerging markets have increased at a rapid rate in recent years, reaching $564bn as of September 2016. Assets have more than doubled since 2010, and increased sixfold in the past 10 years.
Preqin’s latest research finds that emerging hedge funds with a three-year track record or less have posted higher performance over 12-month and 3- and 5-year time horizons compared to the wider industry. At the same time, the volatility of these emerging funds has recently converged with that of hedge funds as a whole.
In this update covering Q2 2017, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q3.
The private equity-backed deals market saw signs of recovery in Q2, after a slowdown in Q1: 1,001 deals were announced worth a total of $83bn, up from $55bn in deals announced the previous quarter. However, while North America and Asia saw robust activity, Europe saw deal values slump to their lowest level since Q1 2016.
The venture capital-backed deal market has recorded its largest ever quarter in Q2, as 2,062 deals were announced worth a combined $47bn. This surpasses the previous record of $43bn recorded in Q3 2015, helped in part by the largest ever venture capital deal, Didi Chuxing’s $5.5bn financing in April.
The infrastructure deals market saw 277 deals announced in Q2, worth a combined $51bn. This continues the significant slowdown seen in 2017 so far, after every quarter from Q3 2015 to Q4 2016 saw deal values exceed $100bn. In fact, Q2 2017 has seen the fewest deals announced since Q3 2009.
The hedge fund industry faces a challenging environment in Europe: assets under management in the region declined to $657bn in 2016, and net investor outflows have continued into Q1 2017, despite recent positive performance.
Private equity funds closed in 2017 so far are spending less time on the road to raise more capital than in any year previously. The biggest and most consistent top performing firms in particular are raising capital faster and more successfully than their peers.
The Preqin All-Strategies Hedge Fund benchmark returned 0.26% in May, marking the seventh consecutive month of positive returns for the industry. Hedge funds have recorded gains of 4.37% in 2017 YTD, and 10.33% over the past 12 months, surpassing most investors’ expectations for the industry.
Sovereign wealth fund investors are increasingly looking to make private debt investments an element of their portfolios. Almost 40% now actively invest in the asset class, including two-thirds of those managing $250bn or more, and all of those managing $100-249bn.
The Billion Dollar Club of investors which allocate $1bn or more to real estate has grown to 433 members in 2017. Collectively, these investors hold more than $39tn in AUM, and represent more than four-fifths of institutional capital in the asset class.
Unlisted natural resources fundraising focused on renewable energy has outstripped fundraising for conventional energy in 2017 so far. Furthermore, renewable-focused funds currently in market are more numerous and seeking more capital than their conventional energy-focused counterparts.
The recent launch of Blackstone Infrastructure I demonstrates the long-term trend towards capital concentration in the infrastructure market. Funds closing on $1.5bn or more have accounted for three-quarters of the total capital raised in 2016 and 2017 so far.
The Billion Dollar Club of hedge fund investors allocating $1bn or more to the industry has grown in the 12 months to June 2017, and now stands at 242 institutions. Collectively, these investors allocate $805bn to the industry, accounting for almost a quarter of total hedge fund assets.
Investor appetite for direct lending in the US has grown steadily in recent years, and assets in the sector have now reached almost $100bn. Interest in the sector is focusing on the lower middle market in particular, with investors viewing it as an attractive alternative to fixed income products.
The Europe-focused infrastructure market is developing at a rapid rate, with both fundraising and dealmaking hitting record levels in recent years. As a result, total assets under management in the region have reached $109bn as of June 2016, a new record.
The hedge fund industry saw net inflows totalling $19.7bn in Q1 2017, with the total assets held by hedge funds increasing by 3.2% to reach a record $3.35tn.
The Preqin All-Strategies Hedge Fund benchmark returned 0.76% in April, its sixth consecutive month of positive performance. Macro strategies funds saw their second consecutive month of losses, but all other leading hedge strategies made gains. 12-month performance for the industry now stands at 10.67%.
Total assets managed by the global venture capital industry reached $524bn as of June 2016. The industry has almost doubled in size from the $271bn in AUM it held at the end of 2008. This increase comes despite funds returning record levels of capital back to investors, distributing $42bn in H1 2016 alone.
Emerging private real estate fund managers are finding fundraising increasingly difficult, despite posting higher returns than their more experienced counterparts. Just 36% of investors would currently commit to funds operated by emerging managers, and these vehicles account for just 10% of capital raised by real estate funds in 2016.
A quarter of all hedge fund managers surveyed by Preqin at the end of 2016 had changed at least one service provider over the preceding 12 months. Cost and quality of service were the factors most frequently cited by firms as the reasons they changed provider.
Private debt fund managers intend to deploy more capital in 2017, despite an environment of high valuations and stiff competition. Almost 80% of managers said they were planning to invest more in 2017 than in 2016, and no firms reported to Preqin that they are looking to decrease investment levels.
Sixty-three percent of sovereign wealth funds currently hold allocations to real estate, a higher proportion than invest in almost any other asset class. Primarily, these investors look to commit directly to real estate projects, rather than invest in commingled real estate funds.
Secondaries firms attracted a record level of investor capital in Q1 2017, as six funds raised $14bn, surpassing the previous all-time high of $13bn secured in Q4 2014. The closure of $7.5bn Strategic Partners Fund VII drove fundraising in the quarter, while three more vehicles in excess of $1bn closed through Q1.
There are currently a record 1,908 private equity funds on the road, targeting an all-time high of $635bn in investor capital. Vehicles currently in market include some of the largest ever raised: the top 10 largest alone are seeking a combined $203bn, 32% of the total sought by the entire industry.
The Preqin Quarterly Update: Hedge Funds, Q1 2017 finds that the continued losses posted by CTAs in Q1 are having a negative effect on investor demand, with searches for CTAs falling by eighteen percentage points from the previous quarter.
Private equity real estate managers reduced their investment activity in Q1 2017, with both the number and aggregate value of transactions showing a decline. In total, 568 deals were completed for a combined $38bn, down from the previous quarter when 853 transactions were worth a total of $57bn.
The hedge fund industry maintained its positive start to 2017 with gains of 0.68% in March, and the Preqin All-Strategies Hedge Fund benchmark is now recording Q1 2017 performance of 3.18%, marking the best opening quarter since 2013.
The total assets under management held by sovereign wealth funds rose 1% to $6.59tn in March 2017, up from $6.51tn a year earlier, marking a slowdown in the rate of growth compared to previous years.
A November 2016 survey conducted by Preqin finds that hedge fund investors in Asia-Pacific are mixed on their future allocations to the asset class, but remain more positive about the industry compared to investors in other regions.
Private capital secondaries fund managers saw an increase in dealmaking activity through 2016, and predict that this momentum will continue through the year ahead.
In this update covering Q1 2017, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q2.
Global venture capital-backed deal activity increased in Q1 2017, as 2,420 deals were recorded, worth a combined $31bn, putting the quarter comfortably ahead of the level of activity seen in Q3-4 2016.
Infrastructure firms maintained the pace of deal flow in Q1 2017, with 339 deals completed for a combined $85bn, far lower than the aggregate transaction value of $127bn recorded in the previous quarter.
Private equity-backed buyout deal activity fell markedly in Q1 2017, as 970 transactions were announced for an aggregate $53bn, although this level of activity remains on par with Q1 2016.
Asia-focused venture capital fundraising has been robust in recent years, totalling more than $43bn since the beginning of 2014. 2017 could mark a landmark year for the region: almost 200 funds are currently seeking over $50bn from investors, and have already secured more than half that via interim closes.
Preqin’s latest survey of 276 hedge fund managers finds that in the wake of high-profile investor redemptions, three-quarters now indicate they are willing to reduce their fees. Many also intend to spend more on marketing in the year ahead, in a bid to overcome investor scepticism about the value of investing in hedge funds.
Launched today, the 2017 Preqin Global Private Debt Report finds that the assets held by the industry grew by $40bn in the first half of 2016. As of the end of June, private debt funds globally hold $595bn in assets under management.
Preqin today launches its 2017 Global Natural Resources Report, which finds that the total assets held by unlisted natural resources funds reached $455bn as of June 2016. The industry has grown by almost $50bn in six months, and has tripled in size since 2008.
The Preqin All-Strategies Hedge Fund benchmark recorded returns of 1.18% in February, building on the 1.43% gains seen the previous month. The industry has now recorded 11 months of positive gains in the past year, and 12-month performance has consequently risen to 13.63%, the highest level seen since May 2013.
The average management fee charged by private debt funds has been on a downward trend over the past four years, and reached an eight-year low among 2016 vintage funds. Direct lending funds charge the lowest fees, whereas venture debt funds have the highest average fees.
A Preqin survey of manager and investor attitudes to co-investments finds that more than two-thirds of all real estate firms offered co-investment rights to investors in 2016. Furthermore, over three-quarters of real estate funds currently in market offer co-investment opportunities.
A Preqin survey of over 180 real estate fund managers finds that two-thirds of firms intend to deploy more capital in 2017 compared to the previous year. Managers see valuations as a key concern for the year ahead, as dry powder has reached record levels and pushed asset pricing upwards.
Institutional investors in real estate are positive about the performance of the asset class over the past 12 months. However, they are concerned about the prospect of maintaining the rate of return seen in recent years through 2017, and consequently some are choosing to limit their exposure to real estate over the short term.
Preqin’s latest survey of hedge fund investors finds that twice as many intend to reduce their exposure to the asset class in 2017 than are looking to increase it. However, some leading strategies are more at risk than others, as investors seek to allocate to those funds they believe can best fulfil their objectives.
Preqin’s H1 2017 Investor Outlook finds that institutional investors are looking for exposure to an ever-widening range of alternative asset classes. A third of investors now commit to four or more asset classes, up from a quarter that did so a year ago, and almost one in ten invest across all alternatives.
The hedge fund industry saw net outflows totalling $110bn in 2016, despite posting their best annual return since 2013. The rate of redemptions accelerated over the year with $43bn withdrawn in Q4, and every leading strategy recorded net outflows for the year.
Preqin today announces the launch of Preqin Solutions, a cloud-based tool that streamlines the portfolio management process for private capital fund managers and investors. The creation of the division follows the acquisition of Baxon Solutions by Preqin in November 2016, and builds on Baxon’s 11-year track record catering to the industry.
Preqin’s latest survey of unlisted infrastructure fund managers finds that they are seeing greater competition for lower-risk core assets compared to projects further up the risk/return curve. This pressure for opportunities is driving up pricing, a key concern for a majority of managers in 2017.
The Preqin All-Strategies Hedge Fund benchmark recorded gains of 1.40% in January 2017. This marks the highest monthly gain for the asset class since April 2016, and the best January performance since 2013. Twelve-month industry returns are now in double figures for the first time since August 2014.
Preqin’s survey of almost 400 private equity fund managers finds that increased competition for deals is concentrated on the mid-market. The majority of fund managers see more competition for mid-market assets compared to a year ago, as investor appetite has spurred strong fundraising and a build-up of available capital.
The private equity secondaries market has enjoyed robust fundraising in recent years, and this looks set to continue in the year ahead. 2016 marked the second-highest level of capital ever raised, and several large secondaries vehicles have already closed in 2017, including the fourth largest fund recorded.
Preqin’s Private Equity Top 100 report finds that the largest fund managers and investors are enjoying an increasingly prominent role in the industry. The hundred largest fund managers have collectively raised $1.5tn over the past 10 years, while the biggest investors currently have almost $800bn committed to the asset class.
Drawing on data compiled for its 2017 Global Hedge Fund Report, Preqin has created league tables of the most consistent top performing hedge funds over the past five years. The rankings track funds’ consistency across four metrics: annualized return, annualized volatility, Sharpe ratio and Sortino ratio.
Preqin’s latest investor survey finds that over a quarter of private debt investors feel their portfolios outperformed expectations in 2016. As a result, the majority of respondents intend to commit more to the asset class in 2017 than the year before, and two-thirds intend to increase their allocation in the long term.
The 2017 Preqin Global Private Equity & Venture Capital Report finds that the private equity industry has grown to $2.49tn as of June 2016. This continues eight successive years of growth in the wake of the Global Financial Crisis: the industry has doubled in size since 2006, when global assets stood at $1.16tn.
The 2017 Preqin Global Hedge Fund Report finds that assets held by hedge funds globally reached a record $3.22tn as of the end of November 2016. Industry gains of 7.40% across the year drove this growth, offsetting net investor outflows of $102bn.
The 2017 Preqin Global Real Estate Report finds that funds are returning record levels of capital to their investors. Managers distributed a record $212bn in 2015, and $128bn in H1 2016. This has been driven by strong performance, which has seen real estate annualized returns reach 14.9% over the past three years.
The 2017 Preqin Global Infrastructure Report finds that the total assets under management of the unlisted infrastructure industry reached $373bn as of the end of June 2016, up from $325bn at the end of 2015. Record fundraising has seen assets grow despite record levels of capital being returned to investors.
Preqin finds that Asia-focused fundraising saw its second annual decline in 2016, as 148 vehicles raised $40bn. However, investors cited emerging Asia, China and India as the regions presenting the best opportunities in 2017, and the Asian VC market continues to grow in global significance.
The Preqin All-Strategies Hedge Fund benchmark posted returns of 7.40% in 2016, marking the best performance year for the industry since 2013, and more than tripling the gains made in 2015 (+2.03%).
Preqin’s end-of-year update finds that the global value of infrastructure deals in 2016 reached a record $431bn, up from $362bn seen the year before. This level of activity was driven by strong activity in Asia, as transactions for assets in the region reached $131bn, the highest of any region.
In this update covering activity in 2016, Preqin reviews the closed-end private capital fundraising market as a whole. We also examine each closed-end alternative asset class individually, looking at fundraising through the year and the state of the fundraising market in these asset classes at the beginning of 2017.
2016 saw 3,985 private equity-backed buyout deals recorded globally, which is likely to surpass the current all-time high of 4,006 deals seen in 2014. Exit activity cooled slightly through the year, as 1,682 exits were made, worth a total of $330bn.
2016 was another strong year for the venture capital-backed deal market, as 9,717 deals were announced globally worth a combined $134bn. This is the second consecutive year that deal values have exceeded $100bn, following $143bn in deals recorded through 2015.
The Preqin All-Strategies Hedge Fund benchmark recorded gains of 1.00% in November, as all top-level strategies posted positive performance. North America-focused hedge funds recovered from losses suffered in October (-0.69%) to post returns of 2.89% through November, the greatest of any region.
Five months after the UK’s vote to leave the European Union, Preqin surveyed 276 hedge fund managers and 108 investors to chart the ongoing impact of Brexit on their portfolios. It found that industry participants have become more upbeat about the result, with a third of fund managers saying it has boosted their performance.
North America has extended its dominance in the oil & gas market in recent years. 2015 marked a new fundraising record as 35 funds secured an aggregate $44bn, and 2016 should surpass that total with $34bn raised as of October, accounting for more than three-quarters (76%) of global capital raised in the industry this year.
Preqin’s latest report on hedge fund asset flows finds that total industry AUM grew to $3.24tn as of the end of Q3, owing to robust performance through much of 2016. However, the industry saw net investor outflows of $33bn through Q3, bringing total 2016 YTD outflows to $67bn.
Fundraising for renewable energy-focused infrastructure funds has reached $10bn in 2016 YTD, following a record 2015. At the same time, the total value of deals seen in 2016 so far has reached $43bn, approaching the all-time high of $50bn seen in 2012.
Following Donald Trump’s victory in the 2016 US presidential election, Preqin interviewed 182 alternative assets fund managers in order to gauge their perceptions of the likely impact of the result on their portfolios, and their prospects for the next four years.
Preqin’s 2016 Private Capital Fund Terms Advisor finds that top quartile funds favour fee structures that incentivise strong performance, charging lower management fees, on average, and a higher rate of carried interest and hurdle rates.
The Preqin All-Strategies Hedge Fund benchmark made minimal gains of 0.01% through October, as recent positive momentum tapered off. However, hedge funds have still posted overall gains of 5.46% so far in 2016, and remain on track to record the highest performance year for the industry since 2013.
Preqin’s latest research into employment and compensation practices in the private capital industry finds that less than half of fund managers made firm-wide base salary increases between 2015 and 2016, although those that did made large increases.
Preqin today announces that it has acquired Baxon Solutions, effective immediately. This acquisition represents the next step in the strategic partnership enacted between the two companies in January 2015, and aims to build on the success of the past 2 years.
The private debt industry in Europe has seen five consecutive years of annual fundraising increases since 2010. However, this pattern looks set to be broken in 2016, with the total capital raised so far reaching only half the total seen last year.
Private real estate fund managers returned a record $194bn to their investors in 2015, while calling upon just $93bn of investor capital, the lowest level since 2011. However, there are concerns among both investors and fund managers that asset valuations may impact future returns.
Preqin’s report on first-time private capital funds finds that over recent years they have consistently outperformed vehicles run by established managers. Investor sentiment is increasingly warming to debut managers, with the majority now saying they would invest in a first-time fund.
Preqin’s quarterly update on the hedge fund industry finds that 118 funds launched globally through the quarter. However, Asia-Pacific-based managers accounted for just 3% of new vehicles, a quarter of the proportion seen in Q3 2015.
Preqin’s quarterly update on the private equity industry finds that fund managers returned a record $443bn to investors through 2015, up from $424bn the previous year. Moreover, the capital called up by firms declined through 2015, so private equity investors received record net capital flows of $217bn.
The Preqin All-Strategies Hedge Fund benchmark recorded gains of 0.91% in September, putting overall industry performance in Q3 at 4.06%. This marks the highest quarterly performance since Q1 2013, when funds returned 4.10%.
Preqin’s latest research on the private capital industry in Australia finds that total assets under management in the country have reached a record A$81bn, making it the seventh largest market in the world.
The US is the dominant component of the global hedge fund industry, accounting for 72% of the approximate $3.1tn of total assets. The US hedge fund industry has also seen strong growth in recent years, with inflows of $12bn through H1 2016 and $138bn since the start of 2015.
Preqin’s quarterly update on the private capital secondaries market finds eight funds closed in Q3 to raise a combined $3.8bn of investor capital. This pushes the amount secured through Q1-Q3 to a record $19bn, surpassing the previous fundraising peak of $17bn in 2014.
Preqin’s Q3 update on private equity-backed buyout deals finds that 919 deals were recorded in the quarter worth a combined $90bn. Activity in Europe fell sharply, with aggregate deal value dipping from $27bn in Q2 to $15bn in Q3, as the region recorded its lowest Q1-3 deal value since 2012.
Preqin’s Q3 update on the venture capital industry finds that quarterly aggregate deal value declined from $42bn in Q2 to $26bn in Q3, marking the slowest quarter for deal activity since Q4 2011. At the same time, there were 225 VC-backed exits in Q3 worth a combined $12bn, less than half the total seen through Q2.
Preqin’s Q3 update on the infrastructure deals market finds that there were 289 deals in the quarter worth a combined $75bn. While this represents a slight drop in both the number of deals and the total deal value for a second successive quarter, this is largely a reflection of the record deal flow seen in Q1.
In this update covering Q3 2016, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q4.
Preqin data finds that the unlisted infrastructure debt market is becoming a more significant part of the industry following strong fundraising in recent years. Moreover, there are currently a record 43 infrastructure debt funds in market seeking a combined $25bn.
Preqin research on the unlisted agriculture fund industry finds that recent expansion in the sector has taken the total assets under management to $22bn. Strong fundraising in recent years has been a key driver of this growth with $16bn of capital raised since 2011.
Preqin research finds that investors are maintaining pressure on hedge fund managers to lower fees as performance struggles continue. Just 35% of hedge funds charge the 2 & 20 ‘industry standard’, but the majority of investors say further change is needed.
Preqin’s survey of over 160 institutional private debt investors finds that they view the recent performance of their investments positively, and consequently, many are planning to commit increasing levels of capital to the asset class over the next 12 months.
Preqin’s survey of over 175 institutional investors participating in real assets – comprising infrastructure and natural resources funds – finds that divergent performance trends have produced different outlooks between the two asset classes.
Preqin’s latest report on the private equity industry in Asia finds that in 2016 YTD there has been a decline in activity from the record levels seen in 2015. Overall fundraising and buyout deal activity have fallen sharply, but venture capital deals in the region have maintained momentum.
The Preqin All-Strategies Hedge Fund benchmark saw returns of 0.97% in August, coming down from gains of 2.23% seen in July. Nonetheless, this takes overall industry performance in 2016 YTD to 4.67%, and 12-month performance to 4.86%.
Preqin’s latest research finds that although California is best known for its venture capital industry, the state has seen marked growth and diversification of its alternatives market, as other private capital and hedge fund managers are drawn to the area.
Preqin’s latest survey of venture capital firms found that investor appetite for exposure to the asset class has increased across all regions. However, the largest increase was seen among Asia-based investors; 62% of firms reported increased demand from investors in the region, well above the proportion seen elsewhere.
Preqin’s latest survey of over 490 institutional investors globally shows that while alternative assets remain a crucial component of many portfolios, investors are finding it harder to identify attractive investment opportunities compared to a year ago.
Preqin research into the private equity real estate industry in Asia finds that fund managers located in the region are currently driving fundraising and deal activity, despite some of the largest global firms launching Asia-focused funds.
Preqin releases the 2016 Alternative Assets Performance Monitor, a report examining performance across the alternative assets industry over a range of metrics, including IRRs, consistent performing managers, and public market equivalents.
The 2016 Preqin Alternative Assets Performance Monitor examines the performance of the hedge fund industry over the past 12 months, as both fund managers and instutitional investors believe performance to be the key driver of the change in the asset class at present.
Preqin estimates that there were net outflows of $34bn over H1 2016; the majority of outflows ($20bn) occurred in Q2 2016. As a result, as of 30th June 2016 the hedge fund industry represented a total of $3.1tn in assets under management, down from nearly $3.2tn at the end of 2015.
Preqin’s report on the ‘$1bn Club’ of the largest infrastructure investors and fund managers finds that 82% of these investors commit directly to infrastructure assets, while the largest fund managers account for 85% of aggregate capital raised for the asset class in the last 10 years.
Preqin’s latest survey of over 180 private equity fund managers finds that growing interest from investors and a predicted increase in exit activity has led firms to predict that the industry will continue to grow in assets over the next 12 months.
Preqin’s latest hedge fund performance data update finds that the industry posted overall returns of 2.17% in July, marking the largest cumulative period of positive performance since May 2013, with hedge funds now returning 6.96% since the beginning of March.
Preqin’s report into the unlisted natural resources industry in Africa finds it still at a nascent stage. Fund managers based outside the continent have accounted for 86% of Africa-focused capital raised since 2015, while 69% of active Africa-based firms tracked by Preqin are raising their first ever natural resources fund.
Preqin research finds that real estate debt has grown in prominence over recent years, with fundraising for the strategy reaching $67bn since 2013, while debt vehicles on the road are targeting a record $32bn as of July 2016, up from $23bn a year ago.
Preqin research finds that North America-focused private debt fundraising in 2016 so far is significantly lower compared with 2015. Europe-focused funds closed through the year have attracted more investor capital, raising $16bn compared to $15.7bn for North America-focused vehicles.
Preqin’s report on the infrastructure deals market in Africa finds that the majority of deals completed since 2013 have been for energy projects. Renewable assets, in particular, have attracted significant investment as the focus on power generation in Africa intensifies.
Preqin’s latest survey of over 190 private equity real estate fund managers finds that, with competition driving up the price of assets, the majority of fund managers have reduced the targeted returns of their funds in market.
A Preqin report finds that a record proportion of private capital funds closed so far this year engaged the services of a placement agent, with many of these funds achieving a more successful fundraise than those vehicles that did not employ a placement agent.
Preqin’s Q2 update on the hedge fund industry finds that economic uncertainty following the UK vote to leave the EU has created potential opportunities for hedge fund managers and, as a result, many more funds have launched focused on the region.
Preqin’s latest research into the Asian venture capital industry finds that Q2 2016 marks another record breaking quarter. The region saw $19bn worth of transactions completed, more than North America, largely driven by an all-time high $17bn worth of financings in Greater China.
The Preqin All-Strategies Hedge Fund benchmark reveals that hedge fund performance has stabilised recently; the industry posted gains of 0.15% in June, a fourth consecutive month of positive performance. Q2 returns stand at 2.15%, but gains of 1.36% through the first half of the year represent the worst H1 performance for hedge funds since 2008.
Preqin’s update on the private capital secondaries market finds that the quarter saw the largest ever secondaries fund close, driving the aggregate capital raised in the first half of 2016 to $14bn, an H1 fundraising record.
Preqin’s latest survey of over 270 hedge fund managers finds that the industry is facing increased pressure from investors on fees and transparency, while attempting to overcome a negative perception of the asset class that has arisen partly due to performance issues through the first half of the year.
Preqin’s 2016 Private Capital Fund Terms Advisor finds that recently raised funds are setting higher hurdle rates than in previous years. More broadly, there is mounting evidence to suggest fund managers are making efforts to align their interests with investors’.
Preqin’s annual report on the ‘$1bn Club’ of the world’s largest hedge fund investors, finds that although participants account for only 5% of all active hedge fund investors, they represent nearly a quarter (24%) of the total $3.13tn AUM held by the industry.
In the wake of Britain’s vote to leave the European Union, Preqin has surveyed over 90 institutional investors with exposure to UK real estate. Over half (57%) of all respondents stated that Brexit makes it likely that they will invest less in the UK over the next 12 months, with just 11% expecting to invest more.
In the wake of Britain’s vote to leave the European Union, Preqin has surveyed over 140 alternative assets firms and 50 institutional investors to gauge their reactions. It finds that many fund managers expect performance and investment decisions to be affected, while institutional investors expect to commit less to the UK.
Preqin’s Q2 2016 buyout deals and exits update finds that the total value of private equity-backed buyout deals reached $89bn in the quarter. This is up from the $50bn recorded in Q1, but remains down from the $102bn seen in the same period last year.
The second quarter of 2016 saw 2,244 venture capital deals announced globally worth a combined $40bn. This represents a 9% increase in the aggregate deal value compared to the $37bn seen Q1 2016, but a 12% decrease from the 2,532 deals seen in that period.
The Preqin Q2 2016 infrastructure deals update finds that global infrastructure deal activity slowed in Q2, with just 225 deals concluded worth $72bn. Asian infrastructure assets drove deal activity, accounting for 51% of the total deal value and 27% of global transactions.
In this update covering Q2 2016, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q3.
Preqin’s latest report on private equity in emerging markets finds that the total assets held by fund managers based in these regions has reached a record $297bn as of September 2015, up from $258bn at the end of 2014.
Preqin’s inaugural report on global deals involving PERE fund managers finds that increases in dry powder have led to increased competition for assets. As a result, fund managers are turning to smaller assets and more complex portfolio transactions in search of attractive investment opportunities.
A survey of 270 fund managers conducted by Preqin in early June finds that 79% of both UK- and Rest of Europe-based managers believe Britain will remain in the EU. However, opinion on whether the impact of a British exit would be positive or negative for the hedge fund industry differs between the UK and the rest of Europe.
The hedge fund industry made overall gains of 0.93% in May, to mark the longest period of positive performance since May 2015. Event driven strategies saw the highest returns, gaining 1.59%, while macro funds were the only leading strategy to suffer losses, returning -0.11% for the month.
Micro venture capital fundraising has seen six consecutive years of growth, from $6.5bn raised in 2009 to $8.5bn secured in 2015. Over the past decade, venture capital funds targeting $100mn or less have represented a majority of venture capital funds closed globally in each year.
Preqin’s latest findings show that the number of institutional investors actively investing in CTAs reached a record 1,067 in 2015, up from 1,017 in 2014. As a consequence, CTAs have seen four quarters of net inflows of capital since the start of 2015, with overall positive asset flows of $38bn.
Preqin data shows that only 4% of aggregate private real estate capital raised so far this year, and 11% in 2015, was committed to first-time fund managers. In contrast, managers that have raised six or more funds account for 63% of all capital raised in 2016 YTD.
Preqin’s latest research into the natural resources private funds industry shows that assets under management reached a record $400bn as of September 2015, the latest figure available, an increase of 8% from the end of 2014.
Preqin finds that fund managers in the private debt industry are now looking outside of the more established credit markets and expanding their reach to Asia. In 2015, 17 funds raised more than $6bn of investor capital, the highest aggregate total since 2012 when Asia-focused private debt fundraising totalled $8bn.
Preqin’s annual report on the ‘$1bn Club’ of the world’s largest hedge fund managers finds that in the past year, the number of eligible firms has risen by 98. Despite this, the total assets controlled by firms in the $1bn Club have decreased from $2.78tn to $2.75tn.
Preqin’s latest report on the infrastructure deals market finds that the proportion of deals larger than $1bn transacted in the US reached record levels in 2015. Twenty-seven percent of all deals announced were larger than $1bn, up from 20% in 2014.
Preqin’s May update on the private equity industry examines the recent record levels of distributions from funds to investors. The industry has seen positive net cash flows to investors every year since 2011, totalling $428bn as of June 2015.
Preqin’s inaugural Real Assets Spotlight shows the robust state of the natural resources debt fundraising market. Since 2010, 54 funds have raised an aggregate $29bn, and there are a further 32 natural resources debt funds currently out raising, targeting a combined $23bn of investor capital.
The latest research from Preqin finds that overall women hold just 21% of roles at private real estate firms. The proportion of female employees varies with seniority and department; 78% of junior investor relations roles are held by women, compared with only 5% of senior positions in investment teams.
The Preqin All-Strategies Hedge Fund benchmark recorded the second consecutive month of positive hedge fund performance in April to bring 2016 YTD figures into the black for the first time this year. Returns of 1.44% through the month follow gains of 2.40% in March to put performance for 2016 so far at 0.70%.
In its latest review, Preqin finds that sovereign wealth funds investing in real estate in 2016 have moved away from higher risk investment strategies, and are increasingly targeting strategies with a lower risk profile. Core real estate is now the most utilized strategy, employed by 72% of sovereign wealth funds, up from 57% in 2015.
Preqin finds that fundraising for Europe-focused direct lending funds surpassed that of North America-focused funds for the first time in 2015. Europe-focused vehicles secured a total of $19bn in investor commitments through the year, while funds targeting North America raised a combined $17bn.
The hedge fund industry saw net outflows of investor capital in Q1 2016, totalling $14.3bn. Overall, the total assets under management held by hedge funds globally fell 0.48% in the quarter, to stand at $3.13tn at the start of Q2.
Preqin is proud to announce that it has been awarded a Queen's Award for Enterprise in the category of International Trade. As the UK's highest official business accolade, the award recognises Preqin as one of 243 UK companies in 2016 that are outstanding in their fields.
The latest Preqin research finds that Asia-Pacific-focused hedge funds recorded losses of 2.02% through Q1 2016, the lowest performance of any region. Moreover, just 5% of new hedge fund launches were focused on the region, down from 17% in Q4 2015.
The 2016 Preqin Sovereign Wealth Fund Review finds that the total assets under management of sovereign wealth funds globally have increased by $200bn over the past year. As of March 2016, these funds hold $6.51tn in assets on behalf of their countries.
Private equity secondaries funds have continued their strong fundraising in Q1 2016, securing a combined $2.6bn. The number of funds in market has continued to grow across the quarter, and is now at a record high, as 36 vehicles seek a total of $28bn in investor commitments.
The Preqin All-Strategies Hedge Fund benchmark posted 2.82% in March, to record the best monthly return for the asset class since January 2012 (+3.06%). All leading hedge fund strategies posted gains, with equity strategies seeing the highest returns of 3.79%.
The latest update from Preqin shows that the first quarter of 2016 saw 874 private equity-backed buyout deals globally, worth a combined $44bn. This represents a sharp decrease from the 962 deals in the previous quarter, which were worth a post-crisis record $137bn.
Preqin’s latest data shows that despite just 10 unlisted infrastructure funds closing in the opening quarter of 2016, those funds raised an aggregate $15bn1. This represents the fourth highest quarterly fundraising total since 2010, despite being the lowest quarterly number of fund closures since Q1 2014.
The latest update from Preqin shows that 2,403 venture capital deals worth a combined $34bn were concluded globally in the first quarter of 2016*. This represents an increase in the number of deals and aggregate deal value compared to Q4 2015, which recorded 2,366 deals globally, worth a total of $27bn.
In this update covering activity in Q1 2016, Preqin reviews the closed-end private capital fundraising market as a whole. We also examine each closed-end alternative asset class individually, looking at fundraising through the quarter and the state of the fundraising market in these asset classes at the beginning of Q2.
The 2016 Preqin Global Private Debt Report finds that the industry continued its robust growth in 2015, with total assets under management reaching $523bn as of June, up from $483bn at the end of 2014.
The 2016 Preqin Global Natural Resources Report finds that performance concerns have had a negative impact on institutional investors’ short term allocation plans. Forty-one percent of natural resources investors plan to allocate less capital to the asset class in 2016, although 28% plan to increase their allocations over the longer term.
The Preqin All-Strategies Hedge Fund benchmark improved on losses of 2.68% in January but still posted negative performance of 0.06% in February. CTAs, meanwhile, continued their robust performance with gains of 2.18% in February to take 2016 YTD returns to 3.15%.
Preqin finds that 65% of surveyed institutional investors in private equity hold a generally positive perception of the industry, and just 6% have a negative view. Strong performance has contributed to this buoyant sentiment, with 94% of investors stating that performance had met or exceeded their expectations in 2015.
Drawing on data compiled for the 2016 Preqin Global Hedge Fund Report, Preqin has created league tables of hedge funds that have most consistently delivered strong, stable performance. These league tables do not seek in any way to endorse these funds, but rather to illustrate those that have performed the most consistently over the period January 2013 – December 2015.
Preqin research finds that the average proportion of female senior employees at private equity firms is increasing across most geographies and strategies. Overall, women currently constitute an average of 12.6% of senior employees at private equity firms, up from 11.7% in 2015.
Preqin surveys of private real estate fund managers and institutional investors show the increasing prevalence of co-investments within the asset class. Almost two-thirds of fund managers currently offer co-investment rights to investors, while another quarter are considering offering them.
The Preqin Investor Outlook: Alternative Assets, H1 2016 finds that investors are mixed in their attitudes to the alternative assets industry. The majority of private equity and real estate investors are positive, but hedge fund and natural resources investors have a more negative perception.
Preqin’s All-Strategies Hedge Fund Benchmark recorded losses of 2.60% in January, its worst monthly performance since May 2012. Despite overall negative returns, hedge funds still offered downside protection against turbulent global markets while CTAs posted their best monthly performance (+1.38%) since January 2015.
A special private debt report by Preqin finds that distressed debt fund managers focused on North America and Europe have record levels of capital available for investment. While fundraising for these regions remained steady, dry powder increased by $9.1bn to reach an all-time high of $55bn by the end of 2015.
Preqin's private equity fund manager outlook for 2016 finds that fund managers believe pricing for investment opportunities and fundraising will be the biggest challenges facing them in 2016.
The 2016 Preqin Global Real Estate Report finds that private closed-end real estate funds have again returned record amounts of capital back to investors; funds distributed $138bn to investors in 2013, $187bn in 2014, and a further $103bn in H1 2015.
Preqin’s 2016 Global Hedge Fund Report finds that 2015 was another challenging year for the industry, during which the Preqin All-Strategies Hedge Fund benchmark recorded gains of 2.02%. Despite this, total industry AUM increased by $178bn to reach $3.2tn as of November 2015.
In its 2016 Global Infrastructure Report, Preqin finds that both fund managers and investors are concerned with sourcing deals at compelling pricing in 2016. The majority of fund managers and 38% of investors cite finding attractive investment opportunities as the key challenge facing them in the year ahead.
Preqin’s 2016 Global Private Equity & Venture Capital Report finds that record distributions are spurring investors to commit more capital in 2016. Private equity funds distributed $189bn in H1 2015, continuing momentum from the record $475bn that was returned to investors in 2014.
Preqin's 2016 Global Alternatives Reports find that alternative assets fund managers hold a record $7.4tn in combined assets under management (AUM) in 2015, up from $6.9tn a year before. Private capital funds hold $4.2tn in combined AUM, while the hedge fund industry now stands at a combined $3.2tn.
December was another difficult month for the hedge fund industry, as the Preqin All-Strategies Hedge Fund benchmark recorded performance of -0.40%. This puts full-year performance for 2015 at 2.02%, the lowest yearly return since 2011, when hedge funds posted -1.77%.
In this update covering activity in 2015, Preqin reviews the closed-end private capital fundraising market as a whole. We also examine each closed-end alternative asset class individually, looking at fundraising through the year and the state of the fundraising market in these asset classes at the beginning of 2016.
2015 saw the aggregate value of venture capital deals increase for the third successive year to stand at $135.8bn, up from $93.5bn in 2014 and more than double the $57.1bn in 2013. While Asia saw a significant uptick, deal numbers in Europe and North America fell.
Private equity-backed buyout deal activity saw continued growth in 2015, as 3,546 deals were recorded totalling $409bn. This represents an 18% increase on the $348bn of private equity-backed deals in 2014, and it is the sixth consecutive year in which global deal value has increased.
2015 has seen a continued decrease in both the number and aggregate value of US venture capital exits. The first three quarters of 2015 saw 414 exits generate an aggregate value of $28.8bn, while the same period in 2014 saw 527 exits with a total value of $62.2bn.
Underwhelming performance in 2015 and high investor dissatisfaction have reduced inflows and demand for CTA funds. Fifty CTAs launched in the first nine months of 2015, and the year looks set for the fewest launches since 2006, when 66 CTA funds launched.
Europe-focused infrastructure funds have continued their strong fundraising in 2015, with 12 funds reaching a final close raising an aggregate €9.4bn in investor commitments. This total follows the €9.6bn raised in 2014, and approaches the €10.5bn raised by funds closed in 2013.
The latest research by Preqin shows that capital raised in 2015 by natural resources funds is on course to match the record $61bn raised by such funds in 2013. Fundraising in 2015 YTD has already surpassed the $52bn raised in all of 2014.
The latest research from Preqin finds that management fees among infrastructure funds of more recent vintages are lower than for previous vintage years. While 2012 and 2013 vintage funds have a median investment period management fee of 2.00%, funds currently in market, or with a 2015 vintage, have a median fee of just 1.50%.
Preqin’s latest survey of fund managers and investors examines the increasing appetite for co-investments among both parties. It finds that 80% of limited partners (LPs) have seen their co-investments outperforming private equity funds, with 46% seeing their co-investments outperform by a margin of over 5%.
Preqin’s latest research shows the challenging fundraising environment faced by private real estate fund managers attempting to raise their first or second offering. Despite strong overall fundraising market for new private funds, emerging managers account for just 16% of real estate capital in 2015, the lowest proportion ever.
Preqin’s 2016 Private Equity Compensation and Employment Review finds that among surveyed firms, 74% of private equity fund managers have made firm-wide increases in base salary from 2014 to 2015. The average increase in salary was 7%, with 14% of firms increasing base salaries by more than 10%.
Preqin’s Q3 private debt report reveals that direct lending funds continue to be the largest part of the private debt market, accounting for $9bn of the $19.3bn raised by private debt funds closed in the quarter. Half of the 10 largest funds closed in Q3 were direct lending funds, and 42% of private debt funds currently in market follow this strategy.
Aggregate deal value in Asia for both venture capital and buyout funds hit record highs in 2014. While buyout activity does not look likely to match that in 2015, venture capital deals have already surpassed 2014’s total of $22.4bn, reaching $31.6bn by the end of August. Over the past two years, average venture capital deal size has increased by 259%, from $5.6mn in 2013 to $20.1mn in 2015 YTD.
Opportunistic funds have continued their robust fundraising activity into the third quarter of 2015, as funds that held a final close in the period raised an aggregate $28.2bn. This represents 75% of the total amount of capital raised by private real estate funds in Q3, and far outstrips the $7.2bn raised by opportunistic funds closed in Q2.
The infrastructure fundraising market rallied in Q3, after declining from the most recent peak of $15.9bn, seen in Q2 2014. The $13.1bn secured by unlisted funds closed in the quarter represents a 51% increase on the $8.7bn raised in Q2, and brings the total aggregate capital raised in 2015 YTD to $27.2bn.
Global private equity fundraising saw a further slowdown through the third quarter of 2015. One hundred and seventy funds closed, down from 317 in Q2 2015 and 290 in the same period last year. The aggregate capital raised by funds closed in this quarter was $116.9bn, down from $129.3bn in the previous quarter. It was the third consecutivequarterly decline in fundraising, and represents a 29% decrease from the $164.9bn raised in Q4 2014, the most recent fundraising peak.
There were 230 trade sale exits in Q3 2015, nearly matching the record 231 exits in Q4 2012. This total is expected to increase further as more information comes to light, surpassing the previous record and making the quarter the busiest ever for private equity-backed trade sale activity. Trade sales have been the key driver of the private equitybacked exit market in Q3 2015, as the number of IPOs, sales to GP, and restructurings all fell.
The venture capital industry in Asia has seen strong growth over the past year, and in Q3 the aggregate value of deals was comparable to the total value of deals in North America. India and China, the largest part of the Asian industry, marked 709 financings in the quarter, worth a combined $16.9bn. There were 932 venture capital deals in North America in the same period, worth an aggregate $17.5bn.
The latest research by Preqin into hedge fund performance finds that as of the end of August, large hedge funds – those with AUM of $1bn or more – posted the greatest returns of any size category. They outperformed emerging, small and medium funds for the month (with -1.49% returns), as well as across the 12-month (+4.30%), 3-year annualized (+9.06%), and 5-year annualized (+8.52%) horizons.
Figures compiled for the forthcoming 2015 Preqin Private Equity Fund Terms Advisor show the significant disparity in fees private equity fund managers offer investors in their separate accounts and co-investment opportunities, with that of commingled fund investments. When calculating performance fees, 48% of fund managers charge a 20% carry rate for separate accounts, compared to 85% of managers running commingled funds. 48% of managers charge no carried interest on co-investments, while only a quarter keep the same rate as in their main vehicle.
Drawing on data compiled for the 2015 Preqin Alternative Assets Performance Monitor, Preqin has created league tables of hedge funds that have most consistently delivered strong, stable performance. The league tables do not seek in any way to endorse these funds, but rather to illustrate those that have performed the most consistently over the period June 2010 – June 2015.
Following Preqin’s mid-year surveys of both hedge fund investors and fund managers, both parties stated that the greatest challenge the industry currently faces is performance. Forty-four percent of investors named performance as a key issue facing the industry, as well as 22% of fund managers, higher than any other factor.
Preqin’s H2 2015 Investor Outlook has found that investors in private real estate funds have a very positive view of the asset class at present. Fifty-seven percent of investors recently surveyed by Preqin felt positively about their real estate portfolio, up from 37% in December 2014.
Drawing on data compiled for the forthcoming 2015 Preqin Alternative Assets Performance Monitor, Preqin has created league tables of alternative asset fund managers that have most consistently outperformed their peers. The league tables do not seek in any way to endorse these fund managers, but rather to illustrate those that have performed the most consistently in the past.
The global hedge fund industry has seen a $76bn net inflow of assets through the first half of 2015, bringing the size of the industry to $3.22tn. The second quarter saw the greater amount of inflows from investors, with $48bn in Q2 compared to $29bn in first quarter.
Research for Preqin’s latest Investor Outlook has found that four out of five institutional investors invest in at least one alternative asset class. Private equity, hedge funds and real estate are the most targeted alternative asset classes, with over half of investors having an allocation to each of them in their portfolios. Although the benefits vary significantly between asset classes, common reasons cited by investors for holding allocations to alternative assets include diversification, high returns, reliable income streams and inflation hedging characteristics.
The latest Preqin research into infrastructure investment has found that the average deal size has risen 56% between 2013 and 2015 YTD. Transactions completed in 2013 had an average size of $401mn, compared to $626mn for deals done so far in 2015.
Private debt fund managers are currently sitting on a record $185bn in dry powder, capital commitments from investors that are yet to be invested. Fund managers are keen to invest this capital in attractive investment opportunities, as 66% of respondents to a recent Preqin survey of over 100 private debt fund managers indicated they plan to deploy more capital over the next 12 months. Yet managers face intense competition from their peers – over half of survey respondents (51%) noted that they felt competition for investments had increased over the past 12 months, and a third claimed it was harder to find attractive opportunities in the current market.
The latest research from Preqin indicates that an estimated 1,180 zombie funds are being held in institutional investors’ portfolios. This is an increase from the 1,049 estimated by Preqin as of a year ago, and a further increase from the 999 in existence as of July 2013. The value of unrealized assets being held by zombie funds has also risen, from $80.9bn in 2013 to $126.6bn in 2015.
To aid the private equity industry in benchmarking performance, Preqin has launched a new Public Market Equivalent (PME) tool which offers benchmark and fund-level comparison against six public market indexes. These tools overcome the benchmarking difficulties by accounting for the timings of fund cash flows in a public market index, and can be used to analyze and compare private equity performance with public markets on a more meaningful, like-for-like basis.
Preqin’s latest survey of global hedge fund managers reveals that most UK- and Europe-based hedge fund managers are AIFMD-compliant. By contrast, there has been slow uptake among firms beyond the EU’s borders; a quarter of hedge fund managers based across Asia and Rest of World currently comply, and only 15% of firms based in the US.
The hedge fund industry has posted average returns of -0.75% for June, the first month this year of negative performance. Despite this, the benchmark has still returned 4.50% year-to-date. Single-manager hedge funds were not the only fund structures which fared poorly in June; UCITS posted returns of -1.76%, and CTAs made losses of -2.66%, their worst monthly performance since July 2008.
Fundraising in the private debt market has slowed over recent quarters. Twenty-five funds closed in Q2, raising a total of $16.5bn in capital, compared with 26 funds that raised $20.8bn in Q1 2015. This is a further drop from the $23.0bn raised in Q4 2014, and marks the lowest Q2 figure since 2012, when 23 funds raised $8.4bn.
Preqin, the alternative assets industry’s leading source of data and intelligence, is delighted to announce the appointment of Edmond Ho as Chief Revenue Officer. Edmond also joins Preqin's Management Team and will commence his role on 27th July 2015.
Firms managing closed-end private real estate funds have a record $254bn in dry powder available, up 37% from the $185bn in December 2014, and representing the highest amount on record. The increase in uncalled capital available to private real estate fund managers is a result of strong fundraising over the last two years. In Q2 2015, 47 real estate funds closed securing an aggregate $26bn, bringing the 2015 total so far to $60bn. This represents the second highest half year figures for private real estate fundraising since the financial crisis, after H2 2013 when $64bn was raised.
Six unlisted infrastructure funds closed in Q2 2015, raising a combined $4.4bn, a notable decline on the $5.4bn raised in Q1, and the fourth consecutive quarter in which the total capital raised has fallen. Just $9.8bn was raised in the first half of 2015, compared with $24.2bn in the first half of 2014.
The global private equity fundraising environment continued to be slow during the second quarter of 2015, with the lowest amount of capital raised since Q1 2013. A total of 220 funds raised an aggregate $104.7bn globally, down from the 237 funds that closed over the first quarter that raised $128.7bn. Within the North American market specifically, however, fundraising for venture capital funds exceeded that for buyout funds, which has only happened once before in Q1 2012.
The venture capital industry has had a very strong start to 2015. Not only is the fundraising market buoyant, but venture capital fund managers have invested a record $63.0bn over the first six months of the year. This is 48% more than the amount of capital invested through the first half of 2014, and 145% more than the amount of capital invested in Q1 and Q2 2013.
The second quarter of 2015 witnessed 10 large cap buyout deals ($1bn or more in value) across Europe, the highest number since Q2 2008 when 11 took place. This resulted in an increase in aggregate deal value for the region from $20.4bn in the first quarter to $32.4bn in Q2 2015. Globally, there was a total of 755 private equity-backed buyout deals over the quarter, valued at an aggregate $96bn.
Separate account mandates have seen a rise in prominence within the private equity real estate industry over recent years. Preqin tracked 45 separate accounts that were awarded to fund managers in 2014, raising a record $17.8bn in capital. This is up from the $16.1bn awarded to 48 real estate separate accounts throughout 2013. As a proportion of all closed-end real estate fundraising in 2014, separate accounts made up 21% of the total number of real estate funds raised throughout the year, and 18% of the total capital raised – the highest proportion of annual fundraising in any year.
The worldwide “Club” of the largest investors in hedge funds has seen a net migration of 24 investors into the Club over the past 12 months. A total of 51 investors have increased their allocation to the asset class to over $1bn, while 27 investors have seen their allocation fall below the $1bn mark. There are now a total of 227 investors around the globe that have $1bn or more in assets invested in hedge funds, and collectively these investors have $735bn invested in the asset class.
The hedge fund industry has now reached $3.16tn in assets as of the end of Q1 2015, but a growing proportion of these assets are concentrated among a small pool of large managers. The “$1bn Club”, which now includes 570 managers, represents 11% of the total 5,122 single-manager hedge fund managers across the globe. But these firms command a total of $2.78tn of industry capital, which amounts to 92% of the total assets in hedge funds.
The average time that private equity firms have been holding buyout investments in their portfolio has been rising year-on-year since 2008. This reached a record high of 5.9 years for companies exited in 2014, almost two years longer on average than companies sold in 2008. Yet for investments realized so far in 2015, the average holding period has dropped to 5.5 years. This marks the first point that the average holding period for buyout deals has seen a drop since the financial crisis, and is coupled with a strong exit environment which has seen a record number and total value of private equity-backed exits in 2014.
Research conducted for the 2015 Preqin Sovereign Wealth Fund Review found that 45% of sovereign wealth funds active in real estate currently invest less than 5% of their total assets in the asset class. However, all sovereign wealth funds globally have a target allocation of 5% or more to real estate, and 43% have a target allocation to the asset class of 10% or more of their total assets. This suggests that there is potential for significant inflows into real estate as these sovereign wealth funds invest to move towards their strategic targets, particularly as these investors seek ever more globally diversified portfolios.
Preqin’s latest analysis of the risk/return profile of major private equity and private debt fund strategies has shown that direct lending funds have been providing investors with superior returns given their level of risk. These funds, which have increased in prominence since the fallout of the global financial crisis and the reduction in bank lending, are returning 11.4% on average annually. This is only surpassed by distressed debt funds over the same period (vintage 2002-2012), which are returning 12.6%.
The majority of sovereign wealth funds globally have increased their assets under management over the course of 2014. This is despite falling commodity and oil prices, which many of these institutions rely on for funding. The growth in assets, up from $5.38tn in October 2013 to $6.31tn in March 2015, has been driven by continued funding from governments and reserves, as well as from investment returns.
The pace of private equity fundraising slowed in Q1 2015, following a strong end to 2014. The quarter saw the lowest number of funds close in any quarter for over 10 years, although this figure may increase by 10-20% as more information becomes available. This compares to an average of 288 fund closes in each quarter in 2014.
The opening quarter of 2015 has seen the highest quarterly value of private equity-backed buyout deals since Q3 2007, led by the merger between Kraft Foods Group and H.J. Heinz Company. The total value of buyout deals in Q1 2015 reached $97bn, the highest amount since $125bn worth of deals in the third quarter of 2007.
Q1 2015 saw another strong quarter for private equity real estate fundraising, with $29bn raised. More than three-quarters of the capital raised in the quarter was by just three firms however, with Blackstone Group’s record-breaking $14.5bn fundraise contributing half of the total capital alone.
The venture capital industry has delivered another quarter of strong deal making. The amount of capital invested in young companies is up over 50% on the amount of capital invested in the first quarter of 2014, and has even surpassed deal making in Q4 2014, which was the highest on record.
The global private debt market, also referred to as the alternative or non-bank lending industry, is fast approaching $500bn in assets under management. The industry has seen steady growth over recent years, with one of the most significant gains made through 2013, when AUM leapt up 16% in the space of a year. A lot of this growth has stemmed from the development of alternative lending across Europe, a market that has traditionally been dwarfed by the North American private debt industry.
The proportion of institutional investors active in infrastructure looking to make unlisted fund commitments has been steadily falling in recent years. As of the start of 2015, 65% of infrastructure investors tracked by Preqin were searching for new fund investments over the course of the year. Only two years ago, however, 91% of investors were looking to make new fund commitments. Conversely, the proportion looking to make direct investments in assets has grown from 29% of investors as of the start of 2013 to 56% as of the start of 2015.
Hedge fund managers have got off to a strong start in 2015. Following a year which saw the average hedge fund deliver returns of 3.78%, managers have already returned 2.52% on average two months into the year. Given that performance was named as the key concern in the industry in 2015 by investors in a Preqin survey at the end of 2014, managers will have been keen to deliver strong performance early in the year.
Preqin’s latest research into gender equality at single-manager hedge funds reveals the Asia-Pacific region is leading the way. The region employs women in 11.2% of C-level roles, but is closely followed by North America which employs 10.9%. Europe-based managers have the worst representation of women in senior roles, with only 6.6% held by females.
2015 is set to reach an all-time high in terms of private equity secondaries transaction volume, following an estimated $42bn worth of purchases in 2014. Two-thirds of secondaries fund managers recently surveyed by Preqin intend to invest more capital over the course of 2015 than last year. Following a record year for fundraising for private equity secondaries vehicles, managers have a wealth of capital available to spend in the market.
Venture capital firms have made a notable improvement in the hiring of women in senior positions. Almost 15% of senior positions at these firms are held by women, compared to 14.0% at infrastructure firms, 13.6% at real estate firms and only 10.5% at buyout firms. A year ago, venture capital firms ranked behind infrastructure and real estate firms, but ahead of buyout firms, and have seen the greatest improvement over the past year. Despite these positive steps, only 11.7% of leadership roles are held by women in the private equity industry as a whole.
The majority of institutional investors that were interviewed by Preqin at the end of 2014 believe that more needs to be done with regards to the management fees they pay on alternative assets fund investments. Of the five major alternative asset classes – private equity, hedge funds, real estate, infrastructure and private debt – investors named management fees as the area that needed the most improvement with regards to alignment of interests in all asset classes but private debt. Within private debt, it was second behind the amount managers commit to their own funds.
The private real estate industry has seen improving fortunes in recent years. The industry now manages an all-time high of $742bn in assets and generated annualized returns of 16.7% over the last three years. But this has created an environment of stiff competition. Pricing for prime assets is a concern for many in the industry, and 75% of fund managers feel there is more competition for core real estate assets than a year ago. Furthermore, 72% of firms said they have seen an increase in competition for investor capital compared to 12 months ago.
2014 was the strongest year of private equity investments since the global financial crisis, yet the majority of private equity fund managers are looking to invest more this year. Preqin spoke to 260 firms* worldwide in November last year, and 55% claimed they would be investing a higher amount of capital in 2015 compared to last year. A further 35% of managers suggested they would be investing a similar amount as last year.
Preqin today launches our 2015 Global Alternatives Reports, which reveal significant growth in assets held by private equity, hedge fund, private debt, real estate and infrastructure fund managers. Total industry assets now stand at $6.91tn, up from $6.22tn as of this point last year.
Data from Preqin’s forthcoming 2015 Global Hedge Fund Report shows that industry performance ultimately disappointed in 2014. The Preqin All-Strategies Hedge Fund benchmark gained just 3.78% in 2014, the lowest annual return since the 1.85% loss seen in 2011. Furthermore, most hedge funds failed to match the returns made in the previous year, and solid advances were frequently followed by losses as managers struggled to gain momentum.
Preqin and Baxon Solutions have formed a strategic partnership, effective from today. This partnership includes Preqin taking a significant minority stake in Baxon. It will accelerate Baxon’s development and delivery of a comprehensive portfolio management and valuations platform for the private equity industry. The principal aim of the partnership is to combine the alternative assets expertise of both firms to address the rapidly increasing market demand from both GPs and LPs for transparent, accurate and actionable data on their funds and portfolio investments.
Closed-end private real estate funds that focus on debt investments have had a successful fundraising year, raising the largest annual amount of capital ever. A total of 26 debt funds raised a combined $20bn, up from 29 funds raising $16bn in 2013. Aggregate capital raised across all real estate strategies worldwide reached $90bn, just below the $92bn raised in 2013, but is expected to increase by 10-20% as more information becomes available. However, the total number of funds that reached a final close has seen a notable drop-off, with 177 holding a final close in 2014 compared to 239 in 2013, as capital becomes ever more concentrated among a handful of the larger players.
The infrastructure fundraising market in 2014 saw a slight drop in total capital raised, from $44bn in 2013 to $38bn in 2014. Yet the number of funds reaching a final close has seen a significant drop-off; 2013 saw 69 funds reach a final close compared to 42 funds in 2014. As such, the average fund size has reached levels not seen since 2007, with the average fund closed in 2014 topping $1bn. Furthermore, Preqin’s latest research shows that 54% of infrastructure funds that reached a final close in 2014 exceeded their fundraising target. This is up from 37% of funds that closed above target in 2013, and is the highest proportion since 2008. A further 6% of funds closed in 2014 met their fundraising target.
Over the past year, a total of 7,474 venture capital financings were announced globally with an aggregate value of $86.6bn. This represents an 11% fall in the number of financings taking place compared to 2013, but a 58% rise in the aggregate value of deals compared to the previous year. Companies located in Asia and other regions outside North America and Europe have been the primary benefactors of this increase in financing, with the amount of capital invested across these regions up 160% in 2014 compared to deals done in 2013.
2014 represented the highest ever aggregate exit value for private equity buyout fund managers, with a total of 1,604 exits globally valued at $428bn. This is up over 30% on the total value of exits in 2013, and is the highest ever annual value of private equity-backed buyout exits. This has resulted in a significant increase in the level of capital being returned to buyout fund investors, which had almost surpassed the full-year 2013 amount as of June 2014 (the latest data available). The total value of deals in 2014 reached $332bn globally, the highest annual amount since 2007.
The private equity fundraising market in 2014 has seen a total of $486bn in capital commitments spread between the lowest number of funds in any year since 2009. The amount of capital raised is on track to match the amount of capital raised in 2013 ($531bn), as Preqin expects the 2014 fundraising figure to increase by 10-20% as more information becomes available. For the funds that did close, however, the average time to reach a final close has fallen by two months; funds that closed in 2014 took an average of 16 months, compared to 18 months on the road for funds closed in 2013. Given that the fundraising market is still so competitive, with a record 2,252 funds on the road seeking capital, it is likely that managers may continue to struggle to hold a final close in the coming year.
Preqin’s latest research shows the private equity real estate industry continued to grow in 2014. The aggregate assets under management of closed-end private real estate funds stands at $742bn as of June 2014, an increase of $50bn since December 2013. Total assets under management have increased by 63% since December 2010, with a large proportion of this growth accounted for by the increase in the value of real estate assets still being held by fund managers. The value of the assets held by managers has risen from $314bn in 2010 to $567bn in 2014.
For over a decade since the dot-com crash, the venture capital industry has experienced largely lacklustre returns which have led to tough fundraising conditions for all but a select group of top-tier managers. More recently, however, there have been encouraging signs across the industry, with returns significantly improving and fundraising picking up, particularly as market conditions become more favourable.