Half of mega-fundraisings to struggle this year

John Bakie
14 February 2011

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Half of Europeтs mega-buyout funds launched in 2011 will struggle to reach a first close, according to MVisionтs Mounir Guen.

While there has been much talk of an improving fundraising environment, with unquote" recently reporting on a surge in fundraising activity in recent months, the market is expected to remain challenging for fund managers.

Mounir Guen, CEO of MVision, says the sheer number of players hoping to raise funds this year will lead to a crowded marketplace, with only the best fund managers able to successfully raise funds. "LPs today are asking a lot more questions, and not many funds will meet the criteria they need to invest. The selection process for investors is very intense," he says.

Guen expects the fundraising environment to be highly polarised this year, with the most popular funds raising very quickly, while others will struggle to reach their fundraising targets. "I expect Europe will see six large buyout funds looking to raise this year, but two or three will find it difficult to hit that first close."

Intense competition from European rivals is not the only difficulty fundraisers will have to content with. A lack of capital compared to recent years is also likely to hamper the success rate of new funds. With exits still relatively sparse, and a number of large US endowment funds looking to narrow their GP relationships, there is likely less money to go around.

Growing interest in emerging markets will also hit the amount of funding available to Europe-focused funds, according to Guen. With more institutional investors looking to gain access to emerging markets in Asia, South America and elsewhere, funds focusing on developed markets will likely lose out as more money moves overseas.

Therefore, although 2011 will likely be a better year for fundraising, a crowded market means that only those fund managers with a good track record and a well defined investment strategy will be able to make the most of it.

Last year, unquote" spoke to Mounir Guen of MVision and HarbourVest's George Anson about the fundraising environment. You can watch the full interview here.