VOLUME 14, ISSUE 2 ■ FEBRUARY 2018 PRIVATE EQUITY & VENTURE CAPITAL SPOTLIGHT PRIVATE EQUITY FUNDRAISING IN IN THIS ISSUE 2017: A GLOBAL STORY In 2017, 921 private equity funds reached a fi nal close, securing just over $453bn, the largest amount of capital FEATURE 3 raised in any year. In this feature we examine the private equity industry’s year of success. Private Equity Fundraising in 2017: A Global Story Find out more on page 3 FEATURE 8 First-Time Fund Managers INDUSTRY NEWS 11 FIRST-TIME FUND MANAGERS First-time private equity fund managers secured $26bn THE FACTS in capital commitments across 226 funds in 2017. ■ Consistent 13 We examine fundraising and performance trends for Performing Fund fi rst-time funds as well as investor appetite for these vehicles. Managers ■ Largest Fund 15 Find out more on page 8 Managers ■ Largest Investors 16 ■ Performance Benchmarks 18 CONFERENCES 19 JUST RELEASED: 2018 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL 2018 PREQIN GLOBAL PRIVATE EQUITY REPORT & VENTURE CAPITAL REPORT Order Your Copy Download Sample Pages ISBN: 978-1-912116-05-8 $175 / £125 / €150 www.preqin.com All data in this newsletter can be downloaded to Excel for free Sign up to Spotlight, our free monthly newsletter, providing insights into Alt Credit Intelligence European and US Fund Services Awards: Best Data and Information performance, investors, deals and Provider | Africa Global Funds Awards 2016: Best Research and Data Provider | The Queen’s fundraising, powered by Preqin data: Award for Enterprise: International Trade | HedgeWeek Global Awards: Best Global Hedge Fund Research Provider | CAIA Corporate Recognition Award SIGN UP www.preqin.com/contact| [email protected] REALISE THE POTENTIAL OF PRIVATE EQUITY IN CHINA 7 - 9 May 2018 The Four Seasons Hotel, Beijing www.superreturnchina.com Dear Spotlight reader, We are very pleased to off er a 10% discount to Spotlight readers for registrations to SuperReturn China in Beijing on 7 – 9 May 2018. SuperReturn China brings together the leading lights of the Chinese private equity world including: 300+ global private equity professionals 150+ local and international LPs 100+ world leading GPs Elevate your fundraising process Following a highly successful edition in 2017, we’re bringing back the Fundraising & LP/GP Relations Summit for 2018 and making it bigger and better than ever before: More LP-led sessions. More opportunity to be involved in the debate. A more valuable experience. I hope to see you there! Kindest regards Mark O’Hare Managing Director, Preqin For all bookings & enquiries, please contact the SuperReturn China Team Quote VIP: FKR2452PRQS for your 10% discount Tel: +44 (0)20 3377 3279 Email: g [email protected] PRIVATE EQUITY FUNDRAISING IN 2017: A GLOBAL STORY PRIVATE EQUITY FUNDRAISING IN 2017: A GLOBAL STORY We examine the record-breaking private equity fundraising market in 2017, including analysis of fundraising success, time spent on the road and regional fundraising trends. n 2017, 921 private equity funds Fig. 1: Annual Global Private Equity Fundraising, 2008 - 2017 Ireached a fi nal close, securing just over 1,400 1,243 $453bn, the largest amount of capital 1,201 1,188 1,200 raised in any year (Fig. 1). This marks the 1,075 1,057 1,023 second consecutive year in which annual 1,006 1,000 921 fundraising has surpassed $400bn, a 877 landmark that has only been achieved 800 765 once previously in 2007/2008. Although 600 26% fewer funds closed in comparison 453 407 414 to 2016, $39bn more capital was raised 359 400 316 344 by private equity funds closed in 2017 226 234 213 178 and this fi gure will increase as more data 200 becomes available. 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 The positive net distributions that LPs Year of Final Close have received since 2011 have driven No. of Funds Closed Aggregate Capital Raised ($bn) the stellar fundraising activity seen in Source: Preqin Private Equity Online recent years. The latest data shows that, while positive net distributions continue, CAPITAL CONCENTRATION FUNDRAISING SUCCESS AND TIME ON momentum does appear to be slowing: Of the $453bn raised in 2017, 28% THE ROAD LPs received $66bn in net distributions in ($125bn) was secured by the 10 largest Even though fewer funds closed in 2017 H1 2017, compared to $149bn over the funds closed, and the 20 largest funds than in 2016, a larger proportion of funds whole of 2016. Nonetheless, the results accounted for 42% of all private equity met or exceeded their original fundraising of Preqin’s interviews with investors in capital raised, nine percentage points target, illustrative of the current LP December 2017 show that 63% of LPs have higher compared to 2016. There were a liquidity caused by recent positive net a positive perception of private equity, number of high-profi le mega fund (funds distributions. Half of funds closed in 2017 and 53% plan to increase their allocation >$4.5bn) closures in 2017, including exceeded their target, with 21% achieving to private equity in the longer term. As a Apollo Investment Fund IX on $24.7bn, the 125% or more of their fundraising goal (Fig. result, LP capital is likely to continue to largest fund ever to reach a fi nal close. 2). As market conditions have improved, fl ow back into the asset class as LPs strive With greater capital concentration seen in the proportion of funds that fell short of to maintain their allocations. recent years, the average size of private their target has fallen steadily from 53% in equity funds has grown from $384mn in 2010 down to just 20% in 2017. 2016 to $535mn in 2017. On average, funds closed in 2017 Fig. 2: Private Equity Funds Closed by Proportion of Target Size Fig. 3: Time Spent on the Road by Private Equity Funds Closed, Achieved, 2008 - 2017 2008 - 2017 Average Proportion 100% 1% 2% 3% 120% 82% 88% 95% 90% 94% 101% 104% 104% 107% of Target 3% 6% 3% 1% 3% 3% 4% 6% Size 9% 9% 7% 7% 90% 8% 9% 10% 7% Achieved 14% 8% More than 36 Months 100% 11% 14% 5% 13% 13%15% 13% 13% 13% 11% 14% 80% 18% 20% 16% 90% 11% 20% 22% 18% 21% 18% 31-36 Months 70% 14% 80% 22% 20%18% 15% 21% 21% 19% 15% 23% 21% 23% 25-30 Months 70% 60% 17% 23% 23% 28% 14% 26% 19% 29% 30% 25% 60% 50% 14%16%15% 19-24 Months 20% 26% 50% 26% 23% 22% 40% 33% 26% 20% 13-18 Months 40% 46% 26% 27% 17%27% 17%19%17%21% 38% 29% 30% 30% 21% 35% 29% 29% 28% 19% 7-12 Months 20% 24% Proportion of Funds Closed 20% 16% 13% 22% 21% 16% 30% Proportion of Funds Closed 10% 17% 25%26%25% 6 Months or Less 16% 15% 10% 18% 22% 8% 11% 14% 12% 8% 15%14% 0% 6% 6% 3% 9% 10% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year of Final Close 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Less than 50% 50-99% 100% 101-124% 125% or More Year of Final Close Source: Preqin Private Equity Online Source: Preqin Private Equity Online 3 Private Equity & Venture Capital Spotlight | February 2018 © Preqin Ltd. 2018 / www.preqin.com PRIVATE EQUITY FUNDRAISING IN 2017: A GLOBAL STORY reached a fi nal close in 13.4 months, a Fig. 4: Aggregate Capital Raised by Private Equity Funds Closed by Primary Geographic further illustration of current LP liquidity. Focus, 2008 - 2017 Additionally, the proportion of funds that 500 took one year or less to achieve a fi nal 450 9 close reached an all-time high of 50% in 14 64 400 29 2017 (Fig. 3). 57 350 54 14 14 108 Rest of World losed 12 72 C 300 64 NORTH AMERICAN FUNDRAISING 47 121 115 Asia North America-focused private equity 250 19 82 74 funds secured a new 10-year fundraising 8 17 81 Europe 200 25 of Funds of Funds 53 . 76 high in 2017 with $272bn in aggregate o 16 150 N 62 43 North America capital raised (Fig. 4). This represented a 64 272 100 210 39 44 221 23% increase in total capital raised from 176 190 192 117 2016, and the region accounted for a 50 80 89 98 60% share of all private equity capital 0 secured in 2017, a 13-year high. Capital 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 concentration has been more prominent in North America than in any other Year of Final Close Source: Preqin Private Equity Online region: just 471 vehicles reached a fi nal close, down from 599 in the previous reached a fi nal close, raising just over EUROPEAN FUNDRAISING year (Fig. 5), resulting in the average fund $30bn. Europe-focused private equity fundraising size increasing 43% from 2016 levels to ■ The proportion of total capital raised experienced another strong year in $614mn. by secondaries vehicles more than 2017: 188 funds reached a fi nal close doubled from 2016 to 10% in 2017, raising a combined $108bn (Figs. 4 and Key Findings – North America: thanks largely to fund closures by 5). Furthermore, a signifi cant 85% of ■ Fundraising was bolstered by a Strategic Partners Fund Solutions Europe-focused funds closed in 2017 met proliferation of mega fund closures, ($7.5bn) and Goldman Sachs’ Vintage or exceeded their target – greater than including Apollo Global Management’s Fund VII ($7.1bn). any other region. However, momentum Apollo Investment Fund IX on ■ For the fourth consecutive year, has slowed: 10% less capital was raised $24.7bn, the largest private equity funds, on average, closed above their compared to the record $121bn secured fund ever raised.