Fundraising in the secondaries market shrunk in the first quarter compared to a year ago,Ā whileĀ other private equity strategies ā in particular mezzanine and debt funds āĀ are seeing higher levels of fundraising,Ā according to data released by PEI’s Research and Analytics divisionĀ in its first-quarter review.
Of allĀ private equity capital being raised in the first quarterĀ of this year, a mere 3.3 percent was being sought for dedicated secondaries funds, a drop from 5.1 percent in the same period last year.Ā In dollar terms, the total capital targeted for secondaries fell by almost a thirdĀ to $24.17 billion from $33.19 billion.
Some of the funds seeking fresh money includeĀ Coller International Partners VII, which launched in September and is targeting $5.5 billion, and Partners Group, which is targetingĀ ā¬2.5 billion in its latest secondaries vehicle. Lexington Capital Partners’ Fund VIII, which closed at its hard-cap of $10.1 billion in April, was the third-biggest fund in market during the first quarter.
Not surprisingly,Ā buyout/corporate private equity fundraising remained the most popularĀ investment strategyĀ within private equity, accounting for 36 percent or $261.59 billion of the total, butĀ mezzanine and debt funds gained the most in popularity. The amount being sought through mezzanine/debt fundsĀ almost doubled to $124.81 billionĀ and accounted for almostĀ a fifth of the total targeted. Firms includingĀ Oaktree Capital Management, Blackstone and Bain Capital have all launched funds that are seeking to take advantage of this opportunity.
“The number of debt funds seeking capital has increased hugely in the past year,” noted PEI’s Research & Analytics team in its quarterly review. “Debt or credit vehicles are now chasing $125 billion from LPs, up from $68 billion at this stage in 2014.”