Pent up investor capital, optimistic markets and an active deal environment have contributed to a blockbuster first half of 2021. Preliminary data from Private Equity International shows that the $415 billion capital raised in the first six months of this year exceeded that of any similar six month period since the GFC.
The high average fund size of $678m was the largest since H1 2016 and exceeded last year’s $595m. The ten largest funds in H1 2021 raised $147b between them, representing ~1/3 of total capital raised.
The biggest fund raise was Hellman & Friedman Capital Partners X at $24.4b followed by KKR North America Fund XII ($18.5b), EQT IX ($18.5b), Clayton, Dubilier & Rice Fund XI ($16b), KKR Asian Fund IV ($15b), TA XIV ($12.5b), Bain Capital Fund XIII ($11.8b), Apax X ($11b), Genstar Capital Partners ($10.2b) and Coller International Partners VIII ($9b).
In terms of asset class, Buyout funds made up 52% of capital raised, followed by Growth Equity at 17% and Venture at 14%. Geographically, North America focused funds made up ~50% of funds raised, followed by 35% for multi regional strategies, 9% Asia pacific focused and only 7% focused on Europe.
Richard Clarke-Jervoise, the global head of private equity and private debt for BNP Paribas Wealth Management noted that a premium was applied to fund managers who have long established track records and have navigated multiple historical cycles. Funds who are performing well have chosen to come back to the market sooner. In this current market, investors need to take a look at their GP portfolios to see whether the portfolio companies are worth the current premium valuations, and whether they have characteristics strong enough to continue to deliver returns into the future. In our opinion and from our experience, the most successful investors and fund managers will be the ones who do not follow the trends, but allocate capital according to their own investment thesis.