Since 2013, private equity firms have been on a fundraising tear, raising more capital in the past five years than during any other five-year period in history.
A recent report from Bain & Company showed that private equity funds attracted nearly $3.2 trillion in investor commitments over the last half-decade, with $701 billion raised in 2017 alone.
“While some investors are starting to question whether the extended surge in capital is a sign that the private equity markets are getting too hot, surveys indicate that LPs remain committed to the asset class and its promise of superior returns,” the report stated, citing research by alternatives data provider Preqin.
This fundraising spree continued on Friday when three private equity firms announced fund closes totaling a combined $6 billion.
These included Clearlake Capital Group, which said it received over $3.6 billion in investor commitments for its fifth private equity vehicle, making it the firm’s largest private equity fund to date.
More than 150 institutions from more than 25 countries invested in fund, according to Clearlake. Investors include the California Public Employees’ Retirement System, Los Angeles Fire and Police Pensions, Pennsylvania Public School Employees’ Retirement System, New York State Teachers’ Retirement System, and Pennsylvania State Employees’ Retirement System.
Clearlake started marketing the fund in late September of 2017 with a target of $2.5 billion, according to a person familiar with the matter.
In 2017, two-thirds of funds met or exceeded their fundraising goals, according to the Bain report. Thirty-nine percent of those funds closed in under a year.
[II Deep Dive: Will Private Equity Eat Itself?]
Also announcing a final close on Friday was Harbourvest Partners, which said it raised $1.7 billion for its Europe, Asia, and emerging markets-focused HIPEP VIII Partnership fund, exceeding its target. More than 40 investors from private and public pensions, corporations, foundations, and family offices committed to the fund, according to the announcement.
“This latest fundraise shows the demand from existing and new investors for global, ex-US private equity,” said Carolina Espinal, managing director at HarbourVest, in a statement.
A spokesperson for Harbourvest said the firm's initial target was $1 billion, and that fundraising began in September 2016.
So far, Harbourvest has allocated 29 percent of the capital invested in the fund, after starting to make commitments in May 2017. The firm said it plans to deploy the rest of the $1.7 billion over three to four years.
In addition, first-time manager Brightstar Capital Partners announced that it had raised $710 million of institutional capital for its inaugural fund, which will target middle-market companies. Brightstar has already started deploying this capital, having invested in two Texas-based companies so far.
Despite the high level of capital already committed to private equity funds, fundraising is unlikely to slow down. According to the Bain report, 92 percent of investors surveyed by Preqin plan to devote the same amount of capital or more to the asset class over the next 12 months.
