Global private equity fundraising dips in the first half of 2024

Global private equity fundraising declined in the first half, with capital raised amounting to $365.75 billion, according to data from S&P Global Market Intelligence and Preqin.

If the fundraising pace continues at the same rate for the remainder of the year, then 2024 will mark a roughly 20% decline compared to the $919.27 billion raised in 2023. The number of funds closed is also on track for another down year, with 704 reported in the first half compared to the full-year 2023 total of 2,590.

Despite the lower data, Fraser van Rensburg, founder and managing partner at placement agent Asante Capital believes that the first half has actually been better for fundraising than in 2023.

In the first half, stabilizing interest rates and inflation and signs of improving public markets over the last nine to 12 months created conditions for an improved fundraising environment, van Rensburg said. "M&A activity is the final variable there that has not really recovered fully, but it has started getting slightly better."

The number of final fund closings does not necessarily point to a lackluster market for raising capital but can be low due to a backlog of funds that did not close in 2023. "It's almost like the aftereffect of that bad market spilled into 2024," van Rensburg said.

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Global private equity fund launches totaled 365 in the first half of 2024, down 47% from the first half of 2023.

Factors impacting new fund launches include private equity's unprecedented $2.62 trillion in dry powder, or capital raised but not invested, and a significant fall in exits during the first half.

The high level of dry powder is a "direct result of a slow M&A market," with funds hesitating to deploy capital due to a lack of suitable deals, van Rensburg said.

– Download a spreadsheet with data in this story.
– Read about private equity dry powder in the first half of 2024.

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Largest fund closings

US private equity firms accounted for six of the top 10 largest fund closures in the first half.

Leading global private equity fundraising in the first half was EQT AB (publ) and EQT Partners AB's EQT X fund, which closed on $23.6 billion and was oversubscribed by $536 million. 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 LLC and Silver Lake Financial's Silver Lake Partners VII fund, which attracted $20.5 billion. The fund specializes in buyouts, targeting a majority stake in companies through direct investments.

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An improved outlook for the rest of 2024

Sentiment at large listed private equity firms suggests a gradual pickup in M&A and IPO activity later this year, which may bolster fundraising efforts.

Limited partners (LPs) in general appear to be optimistic, but they currently have less capital to deploy due to the decline of realizations over the past two years, which has limited GP distributions back to investors, van Rensburg said.

Van Rensburg forecasts a gradual recovery in the fundraising market for the second half of 2024 and into 2025, dependent on the continued improvement of M&A activity.

Author
Maira Imtiaz Annie Sabater
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