PEI Research & Analytics department released first
quarter 2013 fundraising figures this week showing fund managers had raised
more than they’d targeted. Globally, 130 private equity funds held final closes
worth $69.3 billion during the first quarter - $9.4 billion more than their
collective target. When you strip out the funds that had no stated target, the
amount raised was roughly 5 percent above target – an increase on the
comparative 2 percent above target figure for all of 2012.
There are some caveats to consider before
any would – be fund managers assume there’s capital falling from the
sky. To begin with, a fund stated target
may not actually be what the GP wants to raise. Their real target is somewhere
between the target on the cover and the hard cap. In this market, which is very
competitive, GP’s are tending to set their targets more conservatively and give
themselves more room with the cap being higher above their target.
The strong start to 2013 for some GP’s is also to do with
pent-up demand from LP’s who’d hoped to be more active during 2012, says
managing partner of Mecury Capital Advisors. And sentiment is generally better
– at least for North American assets. It has been several years since we’ve
seen this level of appetite for US products. The pessimism in Europe and the cautiousness
that has crept into the Asian Markets has caused the liquidity flows to be
redirected towards the US.
Indeed, PEI data shows North American – focused funds
attracted the largest share of the capital during the first quarter - $23.3
billion – followed by global funds, which raised $18.8 billion. The two
together accounted for just over 60 percent of total funds closed in Q1 2013.
John Denes
CEO
REO Capital, LLC
Johndenes at reocapitalllc.com
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