Private equity firms are seeking to raise almost $1 trillion of new capital, with a growing number of funds asking investors to add to the industry’s record dry powder, according to data provider Preqin.
Nearly 4,000 funds were targeting a total $981 billion as of the end of June, vying for investors’ money in an increasingly crowded market for fundraising, Preqin said in a report Wednesday. That’s up from 1,385 private equity funds seeking $417 billion in January 2015.
The global fundraising effort spreads across private equity strategies, with buyout managers aspiring for the largest chunk of capital. Most of the funds are focused on North America and Asia, according to Preqin, which sees the biggest firms pooling a significant percentage of investors’ money.
“The field is dominated by the largest firms and funds, making the lower end of the fundraising market intensely competitive,” Preqin said in the report. “Just 5 percent of funds in market are targeting $1 billion or more, but collectively they account for almost two-thirds of all capital sought.”
The five largest funds are seeking $175 billion, or 18 percent of the total being raised, according to the Preqin report. Forty-six percent of funds are aiming to raise less than $100 million each.
Venture capital represents by far the largest number of funds being raised, with Preqin tracking a total of 2,388. Buyout fund managers want the most capital at $352 billion, representing 36 percent of the total fundraising target across all strategies.
“Investor appetite remains strong, and fund managers are upbeat about the prospects for the asset class,” said Preqin in the report.
Meanwhile, managers are sitting on a record level of uninvested capital that they’ve already raised from investors. Dry powder rose to a new high of $1.54 trillion at the end of June.
“Many investors have significant commitments yet to be deployed,” Preqin said. “For investors and fund managers alike, it will require more intensive analysis, more granular insights, and more sophisticated strategies to succeed in private equity than ever before.”