Global private equity fundraising declined in the first half, with capital raised totaling $366 bn, acccording to S&P Global and Preqin report.
If this trend continues, 2024 will see a 20% decline from the $919 bn raised in 2023. The number of funds closed is also dropping, with 704 reported in the first half compared to 2,590 in all of 2023.
Despite the lower figures, Fraser van Rensburg, founder and managing partner at Asante Capital, believes fundraising has improved compared to 2023.
In the first half, stabilizing interest rates and inflation, along with signs of improving public markets, created a better fundraising environment. M&A activity hasn’t fully recovered but is showing slight improvement.
The low number of final fund closings doesn’t necessarily indicate a weak market but could result from a backlog of funds that didn’t close in 2023.
Global private equity fund launches reached 365 in the first half of 2024, down 47% from the same period in 2023.
Factors affecting new fund launches include private equity’s $2.62 trln in dry powder, or capital raised but not invested, and a significant drop in exits during the first half.
The high level of dry powder is a direct result of a slow M&A market, with funds hesitant to deploy capital due to a lack of suitable deals.
US private equity firms accounted for six of the top 10 largest fund closures in the first half of the year.
Leading global private equity fundraising was EQT AB (publ) and EQT Partners AB’s EQT X fund, closing at $23.6 bn and oversubscribed by $536 mn. The fund focuses on leveraged buyouts in various sectors, including commercial services, media, healthcare, technology, and industrial technology across multiple global regions.
The second largest fundraise was Silver Lake Technology Management and Silver Lake Financial’s Silver Lake Partners VII fund, attracting $20.5 bn. The fund specializes in buyouts, targeting majority stakes through direct investments.
Sentiment at large listed private equity firms suggests a gradual pickup in M&A and IPO activity later this year, potentially boosting fundraising efforts.
Limited partners are generally optimistic but have less capital to deploy due to a decline in realizations over the past two years, which has limited GP distributions back to investors, van Rensburg said.
