Global private equity firms raised a total of $86 billion in the second quarter of this year, continuing a slowdown from the first quarter that raised $88 billion. Of these, forty-six Asia-focused funds raised $22 billion in Q2, according to the latest report from industry tracker Preqin.
The largest PE fund closed in the quarter was Carlyle Group‘s Carlyle Asia Partners V (CAP V) which raised $6.55 billion, exceeding its $5-billion target and more than 65 per cent larger than its predecessor fund, Carlyle Asia Partners IV.
Private Equity Fundraising in Q2 2018 by Primary Geographic Focus
CAP V is the latest in Carlyle’s Asia buyout funds series, which will focus on buyout and strategic investments across a wide range of sectors in the Asia Pacific.
The report showed that buyout fundraising fell to its lowest level in two years, as 39 funds secured a total of $42 billion. It is the first time in six quarters that fundraising did not reach $50 billion.
Venture capital funds, meanwhile, saw strong activity as 138 funds raised a combined $22 billion.
Global Quarterly Private Equity Fundraising, Q1 2013 – Q2 2018
“The private equity market has seen a continued slowdown in fundraising activity, with Q2 levels on par with those seen in Q1. This is not necessarily a cause for alarm: overall activity has still been healthy by historical standards, and the prolific activity seen in recent years was not seen as sustainable in the longer term,” said Christopher Elvin, Head of Private Equity Products at Preqin.
At the start of July, there were 3,050 private equity funds in the market seeking a record total of $948 billion. Of these, 352 were buyout funds seeking $314 billion in capital.
Meanwhile, the private capital industry also seemed to be tapering off in the second quarter, following the trend in the first quarter of this year. The industry raised $159 billion with 326 funds closed in the quarter.
With every quarter of 2017 seeing firms raise in excess of $200 billion, it seems that “2018 is operating in a different gear”, Preqin said.
Global Quarterly Private Capital Fundraising, Q1 2013 – Q2 2018
These huge inflows have seen total private capital dry powder approach $1.80 trillion as of the end of June, with over $1.00 trillion alone available to private equity fund managers.
“Investors remain committed to most private capital asset classes, but it is possible that some may be waiting to see fund managers deploy some of that capital before making further investments,” Preqin said in its report.
Real estate fundraising
Closed-end private real estate fundraising slowed down in Q2 after two strong quarters. Forty-eight funds secured a combined $23 billion, down from 75 vehicles which raised $38 billion in Q1.
Global Quarterly Closed-End Private Real Estate Fundraising, Q1 2013 – Q2 2018
Thirty-three North America-focused vehicles raised a combined $15 billion, while 11 Europe-focused funds raised $6 billion. There were three Asia-focused funds that raised $1.7 billion in the quarter.
The $3.3-billion secondary vehicle Landmark Real Estate Fund VIII was the largest fund closed in the quarter and is the largest real estate secondary vehicle ever closed.