Private equity funds had their best year for capital raising in 2013 since the global financial crisis, raising a total of $431 billion, up 13% from 2012, according to research from Preqin. Still, this is far below the $688 billion raised in 2008.
After surveying LPs, Preqin found that investors consider Europe as the best region for private equity investment opportunities in the current financial climate. 59% of respondents chose Europe as the top location, while 54% feel the same about North America. Yet only 22% think Asia has the best opportunities, and 11% think the same for all other regions.
“From Preqin’s latest conversations with investors, LPs seem to be focusing their attention on developed markets in
the current climate. As developed economies begin to emerge from the global financial crisis, investors are seeking
safer destinations for their capital with the anticipation that this will bring noticeable improvements in returns,” says Ignatius Fogarty, head of private equity products at Preqin.
North America led the way for capital raising with $266 billion for funds that reached a final close in 2013, a 33% increase over 2012. European funds fundraised $104 billion, an increase of $10 billion over the prior year. However, Asia tallied $42 billion, a fall from the $59 billion raised in 2012, and all other regions brought in $18 billion, which was also a drop from the $28 billion of 2012.
“North America has witnessed the biggest gains in fundraising this year, which was coupled with a buoyant buyout deals and exit market,” says Fogarty. Europe has also seen improved conditions, with investor appetite for the region growing significantly according to Preqin’s latest investor survey; 59% of respondents feel the region offers the best investment opportunities in the current market, compared to 37% of respondents in December 2011.”
Overall, the outlook for private equity fundraising looks positive. Preqin found that investors 36% of investors plan to increase their allocation to the sector over the next year, and 39% plan to do so in the longer term. Meanwhile, 53% plan to maintain their allocation over the next year, and only 10% plan to decrease their allocation. In the longer term, only 8% envision a decrease.
Private Equity Fundraising Reaches Highest Level Since 2008
Private equity funds had their best year for capital raising in 2013 since the global financial crisis, raising a total of $431 billion, up 13% from 2012, according to research from Preqin. Still, this is far below the $688 billion raised in 2008.