Private Equity Fundraising is Making Modest Strides

Just as many growing companies seek investment from private equity funds, those funds must find investors themselves in the form of limited partners (LPs). Fundraising volume is therefore a strong proxy for the level of overall private market investment activity.

In 2023, the value of private capital fundraising fell 20.5% from 2022, and the total number of fund closings dropped 48.4%, according to PitchBook. Private equity fundraising closed the year relatively flat YoY, but a number of mega-funds propped up the asset class, as emerging managers still struggled to raise capital amid geopolitical tensions, high interest rates, and valuation gaps. Moreover, many funds sat on record amounts of dry powder during this period, with the goal of deploying capital later rather than raising new funds.

Signs are pointing to a stronger 2024. Globally, private equity buyout and growth funds raised $155.7 billion in the first quarter of 2024, slightly outpacing previous years. Secondaries vehicles led the way, with recent fund closings including ICG’s $1.6 billion LP secondaries fund and Commonfund’s fourth secondaries fund at $1.1 billion. Additionally, some relatively niche strategies like Arctos’ $4.1 billion fund dedicated to sports-related investments have surfaced. Smaller, growth-equity investors are also in view as the hope for a soft landing in Western economies remains strong and interest rate stability seems more likely.

While initial results signal a stronger year, many funds have asked their boards for fundraising timeline extensions. The industry remains under pressure and may be relying more heavily on a robust M&A ecosystem to keep pace and provide worthwhile exit opportunities.