Industry pushes ahead with fundraisings

John Bakie
31 January 2011

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Fundraising is surging forwards in early 2011, with a raft of funds launching and reaching closes in the past month. Following news that Blackstone has raised $15bn for one of the largest private equity funds ever seen, how are other players responding to renewed demand for investment? John Bakie investigates

At the end of last year, the industry was optimistic of better fundraising conditions ahead, and Blackstone's recent €15bn close on its latest funds will no doubt provide some encouragement that LPs are still keen to invest in private equity. While the Blackstone fund is smaller than the €22bn fund raised in 2007, it is nonetheless remarkable given fundraising began in the wake of the financial crisis.

In January this year, unquote" Research has already recorded eight funds launched or holding a first close, with combined targets of over €1bn. This is coupled with numerous rumours of GPs looking to raise funds in the near future. EQT is rumoured to have appointed UBS to advise it on fundraising, and there are further rumours that Montagu and Bain Capital are also planning to announce new funds this year. Additionally, a number of other major players have invested the bulk of their current funds, including Nord Capital, and may be looking to raise successor vehicles soon.

Looking further back, the past 12 months have seen a strong revival in fundraising, with 59 funds announced or holding an interim close, while 37 have held a final close and begun investing. This compares to just 24 funds that held a final close in the previous 12 months, and 14 funds from that period are still thought to be raising capital.

Furthermore, the bulk of fundraising has taken place in the past six months. Between August 2010 and January 2011, 34 funds announced they were raising, while 19 reached a final close. The figures suggest that private equity fundraising has seen a resurgence in recent months, following an exceptionally difficult period for the industry. Though concerns remain over the future of the global economy and increased scrutiny by LPs, this new boom in fundraising suggests many GPs are now more positive about the future direction of the market.