Fundraising booms in January

In January 2013, unquote" recorded 11 fund launches or interim closes across Europe, an indicator that GPs will be out in force this year, raising money for their new vehicles. The funds seen this month also represent a wide cross section of the industry, from the tiny €3m VenturCap II, the €60m buy-and-build vehicle being raised by Industries & Finances Partenaires, to the huge €2.5bn ICG Europe Fund V.

The UK is the most popular location for funds, with five of January's vehicles based there. Only one of these is focused on the UK market, Dunedin's' £250m third fund, while the rest will focus on Europe and global opportunities, indicating the UK's importance to private equity on the world stage.

The total value of funds raised or being raised so far in 2013 is over €8.15bn, a significant chunk of capital for the first month of the year. However, with concerns over dealflow and suitable financing, it is uncertain whether this will result in improved activity levels through 2013 after a difficult year in 2012. Nonetheless, the increased fundraising drive could indicate that more investors are looking to put capital in private equity and venture capital funds, as low interest rates mean obtaining inflation-beating returns is still difficult.

Another noteworthy trend is the continuing growth of the debt funds business. ICG's vehicle beat its €2bn target by €500m and reached a final close last month, three months ahead of its original deadline. The fund will invest in a range of different opportunities, from mezzanine through to senior equity and restructuring, all through subordinated debt instruments.

Another fund launched in January was Apollo Credit Opportunity Fund III, with a €750m target, which will look to invest in a range of debt instruments, including senior. The growth in popularity of these kinds of funds, which are already common in the US market, could provide the much needed finance for private equity deals that banks are often unable or unwilling to provide.

The glut of fundraising will bring some cheer to the industry after a dour 2012. However, the market will remain highly competitive, and without a significant increase in LP demand for funds, many may struggle to reach their target.

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