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Private-Equity Firms Raise Funds at Fastest Pace Since Crisis

Genstar Capital raised a $3.3 billion fund after spending just two months on the road, according to Preqin.

  • Alicia McElhaney

Private-equity managers are raising funds at the fastest pace since at least the 2008 financial crisis.

A Preqin report released Friday shows that private-equity firms, particularly those that have already raised funds with more than $1 billion, are able to close new pools in as fast as two months. Buyout strategies have done particularly well, with State Street Corp. saying this week that such funds outperformed venture capital and private debt last year with gains of 12.52 percent.

This year, North American-focused firms have outpaced their European peers, reaching fund targets in nine months on average, according to Preqin, a financial data provider. That’s a switch from 2016, when European-focused private-equity firms were the fastest in raising capital, averaging 14 months.

North America’s speed in fundraising is “a significantly shorter period than seen in any region historically,” Preqin said in its report. It’s “perhaps unsurprising” given that 61 percent of investors surveyed by the firm in December identified North America as the region with the best opportunities in private equity.

According to Preqin, Genstar Capital was the fastest in meeting its target, raising $3.3 billion for its eighth fund after spending just two months on the road. That fund closed in March 2017. Silver Lake, too, had speedy fundraising in 2017, attracting $15 billion for its fifth fund in just four months. As for Europe, CVC Capital Partners recently closed a €16 billion (about $18 billion) buyout fund ­­— the largest ever for a European-based private-equity pool ­— in just five months.

Experienced fund managers such as CVC and Silver Lake, are best positioned to take advantage of investors’ strong appetite for private equity, Preqin noted.

About 55 percent of managers that have closed funds with at least $1 billion since 2013 have spent less than 12 months fundraising, compared to 31 percent for those who attracted less than $500 million for new pools, according to Preqin. Managers who have raised at least $5 billion are most likely to exceed their fund target by 25 percent or more, the firm said.

“It is clear that while investor appetite is high, it is also primarily focused on established fund managers with a successful track record,” Christopher Elvin, head of private equity at Preqin, said in a statement Friday accompanying the report.