Fundraising by private equity, private debt, and real assets managers is showing signs of a slowdown after years of record-breaking demand, according to Preqin.
The data firm’s latest report, detailing 2015 activity, showed that private equity funds raised $287 billion during the year—a decline of roughly 15% on 2014’s total.
Other alternative sectors also struggled: Real estate debt managers raised $14 billion, 43% less than the previous year, while new infrastructure assets totalled $36 billion compared with $41 billion in 2014.
Andrew Moylan, head of real assets products at Preqin, said fundraising “remains a tough prospect” for real estate and infrastructure managers. This is despite the wider real estate sector—including non-debt funds—expected to record its fifth annual increase in total fundraising.
“With real estate dry powder now over a quarter of a trillion dollars, fund managers have lots of capital available to invest, but finding compelling opportunities at attractive prices remains a tough prospect,” Moylan said.
He added that infrastructure fundraising was becoming more competitive: “Some firms achieved considerable success in the fundraising market in 2015, and there are likely to be further large fundraises in 2016, but for many firms fundraising is likely to remain a long a difficult process.”
Historical private capital dry powder by asset class ($bn)Despite these signals, across the five main “private capital”
sectors monitored by Preqin—private equity, private debt, real estate,
infrastructure, and natural resources—$550 billion was raised in 2015. While
less than the 2014 total of $590 billion, Preqin said it expected an increase
of 10% to 20% as more data became available.
Unspent capital hit record levels by the end of the year, Preqin reported. Private equity funds had an aggregate $752 billion yet to be deployed, while real estate funds had reserves of $252 billion—both record figures.
In contrast, the natural resources funds covered by Preqin recorded a positive year despite falling commodity and oil prices. In 2015, 62 funds raised a total of $63 billion—an all-time high for the sector.
Related: Why Infrastructure Investors Are Losing Their Appetites & Pricey Stocks—Not PE Bubble—Causing Record Dry Powder, Rubenstein Says