Private Equity Forecast for 2014: Bright Skies Ahead

With structural tailwinds still in place, private equity continues to see a steady increase in fundraising activity. According to Preqin, $431Bn of new capital was closed in 2013, the highest amount since 2008.


22 February 2014

Private Equity Forecast for 2014

With structural tailwinds still in place, private equity continues to see a steady increase in fundraising activity.  According to Preqin, $431Bn of new capital was closed in 2013, the highest amount since 2008.  Notable final closings by large, well-known managers, such as Apollo, CVC, Brookfield and Lone Star, are driving the final tally even higher . It looks like the 2013 momentum will continue in 2014, as a record 2,084 private equity funds are in the market as of January of this year seeking to raise an aggregate of $750Bn in new capital.  So, while a benign interest rate environment, strong M&A activity and healthy exit market still look to be holding steady, the competition for investor dollars is greater than ever.

Similarly to what we did in our previous post recounting H1 2013 fundraising activity, we took a look at what role our Intralinks Fundspace™ solution played in facilitating fundraising activity for the past year.  For all of 2013, over $206Bn, or nearly 50% of all fundraising activity across the globe, was raised using Intralinks Fundspace.  In fact, Intralinks Fundspace was used in raising 15 of the top 20 largest funds that had a final closing in 2013. Check out our full infographic below to see the completed fundraising activity in 2013.

The prognosis for private equity in 2014 looks good.  Pension funds, endowments, foundations and their like continue to view the private equity and real estate markets as a strong source of uncorrelated returns and positive cash flow, particularly in the developed markets.  As one might expect, targeted strategy allocations by investors are reflective of current economic and market opportunities. Mid-market buyouts, both in the U.S. and in Europe, are high on investors’ wish lists, while emerging markets and hard asset strategies rank near the bottom of investors’ interests, according to Probitas Partners’ latest investor survey.

Regardless of strategy, fundraising activity looks to continue its upward trend in 2014 and the Intralinks Fundspace team looks forward to helping GPs reach their targets.  It will certainly be interesting to see how the rest of the year unfolds given any potential changes in the Fed’s accommodative interest rate policy and overall support of the equity markets.

Looking forward, investors have a generally favorable outlook to the private equity asset class, with 36%  of investors and 47% of consultants planning to increase their private equity allocation over the next 12 months according to SEI.  We expect the Intralinks Fundspace solution to continue to play an important role in helping GPs communicate effectively with investors’ in future fundraising activity.

2013 Fundraising Completed Intralinks Fundspace™