(October 1, 2013) — Large private equity (PE) funds have continued to snowball, according to Preqin data, as investors continue to favor sizable and established managers.
The first nine months of 2013 saw 20% more PE capital raised than for the same period last year, but it was dispersed among fewer funds, the data showed. The total number of PE funds closing hit a six-year low in the July-through-August third quarter.
“Many investors are increasingly looking to place more capital with larger and more established managers,” Ignatius Fogarty, head of private equity products at Preqin, said. “With a record breaking number of private equity funds currently in the market competing for capital, the remainder of 2013 is set to continue to be highly competitive for fund managers.”
Still, the average size of shuttered PE funds was $532 million in the third quarter, down $164 million from the April-through-June period.
In this latest three month stretch, 179 funds accumulated $87 billion—a figure that Preqin expects will rise by 10% to 20% as new information becomes available.
A total of 606 funds closed during first nine months of 2013, raising a total of $311 billion, according to the alternative asset data firm.
Of these funds, North American entities represented 66%, or $57 billion, of aggregate capital raised, the report stated. European funds secured $22 billion, while those based in Asia drew $4 billion.
Across all PE strategies, buyout funds secured the most capital—$28 billion—this quarter, the data showed.
CVC European Equity Partners VI was the largest fund to close, accounting for almost 63% of capital raised by European funds, with €10.5 billion secured in seven months. GSO Capital Solutions Fund II, an American distressed debt fund, came in second, with $5 billion.
Stiff fundraising competition is expected, the Preqin report said, with a record of 1990 PE funds in the market as of October 1, together aiming to raise $721 billion.
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