The latest Pitchbook private market fundraising report, on 11 September 2024, reveals mixed trends in private market fundraising worldwide. According to Hilary Wiek, senior strategist at Pitchbook, a research and data firm, the decline in 12-month fundraising figures, which began to turn around in Q2 2023, is expected to result in a total of nearly $1.7trn for the 12 months through Q2 2024. The low point for fundraising is estimated to have occurred in Q1 2023, with gradual improvement projected for the following quarters, Wiek said in the report.
Fundraising insights
The report highlights some positive signs in specific areas. Secondary fundraising saw an increase of $15.3bn in the 12-month total ending Q2 2024 compared to the previous quarter, while real assets experienced a $5.2bn rise. Private equity and private debt both grew by over $1bn each, though, in the broader context of “the hundreds of billions of dollars raised,” these figures do not signal massive improvement, Wiek noted. However, she stated that even modest improvements are seen as encouraging amidst ongoing challenges for general partners.
Real estate and venture capital
Real estate funds have struggled significantly, recording a decrease of $40.5bn in the 12-month period ending Q2 2024 compared to the previous quarter. Venture capital funds fell short by $4.2bn, and funds of funds saw a reduction of $2.8bn. Overall, private capital funds reported a 12-month decline of $24bn, although this is viewed as a potential sign of stabilisation given the anticipated upward trend over time. Despite current difficulties, Pitchbook suggested that the worst may be over for those seeking to raise funds.
Regional highlights
On a regional basis, the report indicated that European fundraising has been notably strong. Europe accounted for 26.9% of global fundraising in the first half of 2024, marking the highest proportion ever recorded. If the second half of 2024 mirrors the first, Europe is on track for a 19% increase in fundraising compared to the previous year, whereas North America is projected to see a 17% decline. Oceania, which had a weak performance in 2023, showed signs of recovery in early 2024, slightly exceeding its total for the entire previous year.
Fundraising strategies
The report also reflected a shift in the types of funds being raised. Historically, flagship private equity funds and tech-focused venture capital funds dominated the largest fundraisings. In contrast, the top two private funds closed in Q2 2024 were buyout funds focusing on tech (Silver Lake and Vista Equity), and three private debt funds exceeded $5bn--one from HPS Investment Partners and two from West Street. The list of the top 10 funds targeting over $10bn by mid-2024 included a diverse mix of strategies, including infrastructure, real estate, private equity growth and secondaries. This diversification, Wiek emphasised, underscores the broad spectrum of mega-offerings in the current market, with fund managers eagerly awaiting limited partners’ commitment to these ambitious targets.
Capital flows
Regarding distributions, the report outlines a complex picture. Overall net cash flows have been negative, which is typical in a growing private funds ecosystem. Distributions in 2023 were lower than in 2021 and 2022, but capital calls were also reduced. The net figure for 2023 showed $77.4bn more in capital calls than distributions, a decrease from the $171.7bn net in 2022. At the strategy level, private debt saw $186.6bn in distributions against $113.1bn in capital calls. Funds of funds had a positive net cash flow of $11bn, while private equity funds had a near break-even result with $385.6bn distributed against $379.4bn called. Venture capital funds experienced a stark disparity, with $157.8bn called and only $63.5bn distributed.
The report concludes that the differing experiences of LPs, based on their investment timing and commitment levels, will influence future capital flows. Those investing in income-generating private debt may find fewer concerns, whereas venture capital investors may face challenges in supporting new allocations. Signs of improved deal-making in 2024 could enhance capital availability for distributions and boost limited partner confidence in private markets.