Global Insights on Private Equity Fundraising - Sponsored by TMF Group

No matter who you talk to, global private equity has enjoyed a period of enormous growth in the last few years. TMF Group, in collaboration with PrivateEquityWire, have captured trends and developments in the global private equity space in their new report; Global Insights on Private Equity Fundraising.

Global observations

The report contains observations from different countries with an established, or in the case of the United Arab Emirates, growing, fund industry.

• North America
   The big PE fund managers keep getting bigger, a trend that will continue to play out, certainly among those managers who are US-headquartered. If each fund is 20 or 30 per cent bigger than the previous fund, these managers will continue to attract the majority of capital inflows. They have the economy of scale and depth of experience that institutional investors appreciate, relative to a smaller manager. Smaller managers can find a niche to attract some of the institutional capital and present themselves to investors as genuine specialists.  This could work to their advantage; and help investors diversify their portfolio within the broader private equity space.

 

• Asia Pacific
   Regional players have tended to dominate fundraising in this region, however heavyweight US managers are prospering in the area, from a fundraising perspective. A US manager became the fourth US-based firm in the last 10 years to raise more than USD4billion for an Asia-focused buyout fund. Asian institutional investors are not too particular as to whether the manager is locally-based or a global manager, as long as they have a proven track record. 
  
   
• EMEA
   Private equity groups continue to show clear interest in Europe, both in terms of making investments and setting up new fund structures, as part of a centralised distribution strategy. For PE managers looking to fund raise in Europe, Luxembourg, Guernsey and Jersey offer many advantages. They have a long and distinguished history, having been home to funds for the last three decades. However, new regulations do increase the compliance burden in the region and as Brexit looms, political uncertainty is not helping. 

Technology can play a vital role in PE Fundraising

PE managers in the middle-market space are beginning to embrace the use of technology to help them improve their fundraising efforts and connect with investors. Using technology to better understand the vicissitudes of LPs, and how they think about their PE allocations, can go a long way to improving the fundraising process because it gives managers a more focused, tailored approach.

Still, compared to the hedge fund industry, PE managers are at least five or six years behind the curve when it comes to using technology. There’s a lot of catching up to do.

Growing trend: Environmental Social Governance investing

Environmental, social and governance (ESG) investing is fast becoming a juggernaut. In European ESG-oriented funds, AUM grew 40 per cent to EUR684 billion between 2015 and 2018, with 290 ESG oriented funds launched in 2018. In the US, AUM doubled over the same period, reaching almost USD90 billion. 

There is  interest both from a fund managers perspective, recognising the returns from ESG investing, and from the investor side since they’re taking an increased interest in the investments made with their funds. In addition, more regulation on the ESG investing front is expected to come down the line, giving the space an additional push. The good news is that there’s bandwidth in the industry to handle increased ESG-focussed investments and regulatory burden.  

The Global Insights on Private Equity Fundraising report

A complimentary copy of the report can be downloaded on this page. 

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