Private Fund Strategies Report€¦ · [email protected] As might be expected, the...

Q1 2020

Private Fund Strategies Report

ContentsFund overview and LP perspective 3-4

Private equity 5-7

Venture capital 8-10

Real assets 11-13

Private debt 14-16

Funds of funds 17-19

Secondaries 20-22

Top funds by size 23-25

Credits & Contact PitchBook Data, Inc.

John Gabbert Founder, CEOAdley Bowden Vice President, Market Development & Analysis

Content James Gelfer Senior Strategist and Lead Analyst, VC Dylan Cox Lead Analyst, PE Wylie Fernyhough Senior Analyst, PE Hilary Wiek, CFA, CAIA Senior Analyst, Fund Strategies and Performance Zane Carmean Senior Data Analyst

DesignKelilah King Production Assistant

Contact PitchBook

Research [email protected]

Click here for PitchBook’s report methodologies.

Download the accompanying Excel pack for all underlying data and additional charts not included in this report.

Dylan Cox Lead Analyst, PE

Hilary Wiek, CFA, CAIA

Senior Analyst, Fund Strategies and Performance

Wylie Fernyhough Senior Analyst, PE

James Gelfer Senior Strategist and LeadAnalyst, VC

StrategyCapital raised ($B)

YoY change

Fund count

YoY change

Private capital

$928.0 -2.8% 1,301 -21.7%

PE $452.6 -3.0% 385 -17.4%

VC $93.9 0.9% 539 -6.9%

Real assets $198.8 -15.7% 183 -49.7%

Debt $112.7 -6.4% 112 -26.3%

FoF $26.4 47.2% 54 -23.9%

Secondaries $43.5 114.6% 28 -3.4%

YoY fundraising changes by strategy (trailing four-quarter)

Zane Carmean Senior Data Analyst

Q1 2020 PRIVATE FUND STRATEGIES REPORT2

https://pitchbook.com/news/articles/pitchbook-report-methodologies

https://files.pitchbook.com/website/files/xls/PitchBook_Q1_2020_Private_Fund_Strategies_Report_Summary_XLS.xlsx

Fund overview and LP perspective

$2,029

$1,069$1,318

$1,408$1,343

$1,299$1,318

$1,323$1,496

$1,611$1,696

$1,766

$2,251$2,300

$0

$500

$1,000

$1,500

$2,000

$2,500

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

Cumula�ve

Ove

rhan

g by

vin

tage

Total

2019*

2018

2017

2016

2015

2014

2013

2012

Private capital overhang ($B)

Hilary Wiek, CFA, CAIA Senior Analyst, Fund Strategies and [email protected] As might be expected, the Institutional Research Analysts at PitchBook Data have received numerous inbound inquiries about what impact the COVID-19 crisis will have on private market cash flows. In a series of notes that began in March, we have been discussing likely scenarios and showing historical data to help visualize what extreme events can do to calls, distributions, fundraising and, ultimately, dry powder. This report is concerned largely with the latter two questions. It is too early to report on the ultimate performance impact of this crisis, but we do have both anecdotal word as well as some data already showing how private market fundraising has been affected. Overall, the suppositions from our note COVID-19’s Influence on Private Market Strategies and Allocators appear to be playing out as expected. Big funds are continuing to close with impressive commitment totals, benefiting both from their established names and the fact that LPs had completed much of their due diligence in 2019. Going forward, we are hearing from both allocators

and managers that re-ups with existing GPs are more likely to find success than new fund strategies. Across private market strategies, this will push the balance even further toward the mega-funds that have been garnering such a large proportion of LP commitment dollars. Funds that have had a first closing and begun investing may have a difficult time with further fundraising if future investors are expected to buy in at cost on investments that now need to be written down.

LPs appear to be pondering their commitment pacing this year, with many choosing to slow the pace at least somewhat. The month of May will see many LPs hosting quarterly meetings with their investment committees; these will be followed by news of decisions made about allocations going up or down or shifting to something more opportunistic.

The denominator effect does not appear to be driving a wave of either forced secondaries sales or LP defaults. While a wave of calls came to LPs in March from GPs paying off subscription lines of credit, acute liquidity issues have not been a widespread issue. A few LP defaults have been reported from small non-institutional investors,

Source: PitchBook | Geography: Global *As of September 30, 2019


https://my.pitchbook.com/research-center/s28517075/table

https://files.pitchbook.com/website/files/pdf/PitchBook_Q2_2020_Analyst_Note_COVID-19s_Influence_on_Private_Market_Strategies_and_Allocators.pdf


Overview

Source: PitchBook | Geography: Global *As of March 31, 2020

$562

.2

$793

.3

$684

.4

$369

.1

$356

.6

$399

.7

$482

.7

$602

.3

$710

.9

$741

.7

$768

.9

$823

.6

$942

.6

$963

.8

$206

.3

1,5811,795

1,718

1,2211,375

1,5281,655

1,7301,943 1,991 1,989

1,8601,742

1,424

299

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*

Capital raised ($B) Fund count

some of whom have since been able to settle up with their GPs. We expect capital calls to fall after this initial wave as GPs spend time shoring up portfolio companies rather than closing on new deals, which should ease any strain LPs may have felt. Deal activity at both the primary and secondary levels has ground to a halt as market participants take some time to recalibrate what companies or LP stakes are now worth.

Private capital had a healthy quarter of fundraising as 2019 efforts wrapped up with final signed commitments. Over

Private capital fundraising activity

$200 billion was raised by 299 funds. In the 12 months ending March 31, 2020, $928.0 billion was raised across 1,301 funds—not a record, but not far off of one either. Adding recent fundraises to ones closed in recent years, we calculate that more than $2.3 trillion of dry powder is waiting to be called from LPs by GPs anxious to identify profit-making enterprises.

We know that record levels of commitments are waiting to be called. Only time will tell how well GPs will purchase, manage and exit investments in an unprecedented time of uncertainty.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

$5B+

$1B-$5B

$500M-$1B

$250M-$500M

$100M-$250M

Under$100M

Private capital funds ($) by size


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

VC

Secondaries

Real assets

PE

Fund offunds

Debt

Private capital funds ($) by type



Private equity$2

78.3

$387

.8

$300

.3

$169

.3

$127

.5

$176

.5

$182

.8

$276

.1

$315

.4

$252

.7

$345

.5

$384

.2

$465

.5

$489

.9

$68.

7

531

611542

354391

466 464517 514

491 510 520

454 438

85

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*


PE fundraising activity

Wylie Fernyhough Senior Analyst, [email protected] After a record-setting effort in 2019, PE fundraising decelerated in Q1 2020, although mega-funds ($5 billion+ for PE) continued to propel overall capital raised. The quarter saw 85 funds close on $68.7 billion, setting 2020 on pace for more muted figures. COVID-19’s impact on in-person due diligence is thwarting fundraising attempts by nearly every GP and further exacerbating the bifurcation between mega-fund managers and everybody else. Thoma Bravo, Silver Lake Management, New Mountain Capital and Francisco Partners have either launched new mega-buyout funds in 2020 or are nearing first closes despite the global pandemic, while smaller firms have had to push out fundraising efforts indefinitely.

The largest GPs are in high demand and able to secure fresh capital from LPs at a time when many smaller firms are unable to do so. With allocators in triage mode, they are more likely to re-up with a proven manager than commit to emerging GPs. Blackstone CEO Stephen Schwarzman echoed this in a recent earnings call, stating that firms with long-standing relationships will be able to weather this storm, but for newer managers, fundraising in this environment may be “almost impossible.” Despite early talk of reopening the economy, business travel and in-person due diligence will likely be inadvisable for LPs for several months, meaning mega-funds and more established firms will continue to assume the lion’s share of capital.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

NorthAmerica

Europe

Asia

Oceania

MiddleEast

Africa

Rest ofworld

NorthAmerica

Europe

Asia

Oceania

MiddleEast

Africa

Rest ofworld

PE funds ($) by region




Private equity

$565$647

$705 $680$630 $645 $638

$722$754 $776

$833

$1,019$1,114

$1,170

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

Cumula�ve

Total

2019*

2018

2017

2016

2015

2014

2013

2012

Ove

rhan

g by

vin

tage


PE capital overhang ($B)

$315

.6

$280

.8

$255

.3

$252

.7

$274

.5

$306

.0

$307

.5

$345

.5

$350

.7

$397

.6

$420

.9

$384

.2

$394

.9

$429

.5

$437

.1

$465

.5

$466

.7

$396

.1

$456

.5

$489

.9

$452

.6

502 497 499 491508 504

481510 489

524 529 520 507460 457 454 466 477 483

438

385

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2015 2016 2017 2018 2019 2020

Rolling 12m capital raised ($B) Rolling 12m fund count

PE fundraising by 12-month rolling total

Source: PitchBook | Geography: Global


Private equity

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

$5B+

$1B-$5B

$500M-$1B

$250M-$500M

$100M-$250M

Under$100M

PE funds ($) by size

0

5

10

15

20

25

30

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

75th percen�le Median25th percen�le Average

Quartile distribution of time (months) to close PE funds

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

Restructuring/turnaround

PE growth/expansion

Mezzanine

DiversifiedPE

Buyout

PE funds ($) by type




0

1

2

3

4

5

6

7

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Quartile distribution of time (years) between PE funds



Venture capital$4

5.3

$53.

3

$51.

7

$24.

4

$34.

7

$45.

8

$40.

1

$41.

8

$54.

1

$77.

3

$75.

5

$62.

8

$96.

4

$79.

0

$32.

8

407 415444

344401

448472 458

558584

633581

625

536

133

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*


VC fundraising activity

James Gelfer Senior Strategist and Lead Analyst, [email protected]

VC fundraising started 2020 strong, with robust activity across developed markets in North America and Europe compensating for a drop in activity in emerging markets, particularly in Asia. Capital remains concentrated primarily in North America, although the share of VC funds based out of Europe continues to grow.

The chasm between large and small funds expanded to an unprecedented level in Q1 2020, with both the average and top quartile of fund sizes higher than the records set in 2019. While the top end of the market has moved the most, the median fund size has also risen to the $100 million mark for the first time. We anticipate headwinds from the economic disruptions stemming from COVID-19, but we believe demand will remain strong for top-tier managers and, as a result, aggregate fundraising numbers will be largely resilient in 2020.

Funds at the smaller end of the spectrum are naturally the most susceptible for several reasons. In addition to being less established, smaller funds typically rely more on family offices and individual investors, which are liable to pull back in a challenging environment compared to institutions that have long-term allocation plans such as endowments, foundations and the like.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

NorthAmerica

Europe

Asia

Oceania

MiddleEast

Africa

Rest ofworld

VC funds ($) by region




Venture capital

VC overhang ($B)

$108$122

$130$122

$118 $119 $117 $115 $115$125

$145 $141

$168$185

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

Cumula�ve

Total

2019*

2018

2017

2016

2015

2014

2013

2012O

verh

ang

by v

inta

ge


$69.

6

$69.

9

$71.

4

$77.

3

$69.

9

$73.

8

$75.

0

$75.

5

$71.

8

$69.

8

$66.

5

$62.

8

$63.

4

$64.

3

$82.

6

$96.

4

$93.

1

$89.

0

$81.

6

$79.

0

$93.

9

574

602

578584 597

608612

633623

606590

581

552 557

582

625

579 584605

536 539


2015 2016 2017 2018 2019 2020


VC fundraising by 12-month rolling total



Venture capital

0

5

10

15

20

25

30

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Quartile distribution of time (months) to close VC funds

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*

$1B+

$500M-$1B

$250M-$500M

$100M-$250M

$50M-$100M

Under$50M

VC funds ($) by size



0

1

2

3

4

5

6

7

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Quartile distribution of time (years) between VC funds



Private debt$1

6.8

$67.

4

$67.

3 $20.

3

$42.

8

$40.

6

$53.

1

$59.

3

$97.

9

$90.

4

$102

.2

$144

.4

$112

.3

$142

.0

$22.

4

36

63 65 6684

88

119138

155

200

173191

153144

19

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*


Private debt fundraising activity

Dylan Cox Lead Analyst, [email protected]

The private debt fundraising environment has become a shadow of its former self, no doubt driven by uncertainty surrounding the COVID-19 pandemic. For the 12 months ending Q1 2020, just 112 private debt vehicles held a final close, the lowest recording of this metric since the 12 months ending Q2 2013. Capital raised has been a bit stronger though, with $112.7 billion in commitments gathered over the same period. GSO (Blackstone’s credit arm) and Ardian each raised multibillion-dollar direct-lending vehicles, which may struggle to find immediate deal flow given the slowdown in sponsor-backed activity likely to occur in Q2 and Q3.

Most of the attention in private debt is now centered around opportunistic strategies hoping to capitalize on recent market dislocations. Almost a third of US debt is now considered distressed, according to ratings agency S&P Global.1 As one might expect, the oil & gas, retail, restaurant and transportation sectors have been hit the hardest. A flurry of mega-funds focused on distressed and special situations have come to market hoping to capitalize on the opportunity. Oaktree is targeting a record $15.0 billion for its latest distressed debt vehicle, while GSO, PIMCO and Bain Capital are shopping similar theses to potential investors.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

NorthAmerica

Europe

Asia

Oceania

MiddleEast

Africa

Rest ofworld

Private debt funds ($) by region

1:“Credit Trends: Tighter Financing Conditions Push The U.S. Distress Ratio Above 30%,” S&P Global, Nicole Serino and Sudeep K Kesh, April 27, 2020”



If these announcements are any indication, direct lending, which had been the poster child of private debt over the last decade, is likely to cede ground to distressed and special situations funds.


https://www.spglobal.com/ratings/en/research/articles/200427-credit-trends-tighter-financing-conditions-push-the-u-s-distress-ratio-above-30-11451520

Private debt

$81.

6

$82.

6

$94.

9

$90.

4

$115

.4

$112

.3

$104

.5

$102

.2

$94.

8

$99.

4

$114

.1

$144

.4

$149

.9

$149

.8

$139

.7

$112

.3

$120

.3

$129

.8

$137

.2

$142

.0

$112

.7

156168

179

200 201 200 192173 171 166 169

191 192 185175

153 152 159 159144

112


2015 2016 2017 2018 2019 2020Rolling 12m capital raised ($B) Rolling 12m fund count

Private debt fundraising by 12-month rolling total

$37

$76$56

$57$63

$71$91

$133$145

$177$191

$253$270 $260

$0

$50

$100

$150

$200

$250

$300

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

Cumula�ve

Total

2019*

2018

2017

2016

2015

2014

2013

2012

Ove

rhan

g by

vin

tage

Private debt capital overhang ($B)




Private debt

Venturedebt

Bridgefinancing

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

Debt

Directlending

Distresseddebt

Real estatedebt

Infrastructuredebt

Creditspecialsitua�ons

Private debt funds ($) by type$5B+

$1B-$5B

$500M-$1B

$250M-$500M

$100M-$250M

Under$100M

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

Private debt funds ($) by size

0

5

10

15

20

25

30

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Quartile distribution of time (months) to close private debt funds




0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Quartile distribution of time (years) between private debt funds



Real assets$1

53.5

$196

.6

$191

.4

$87.

7

$112

.7

$95.

6

$145

.0

$177

.1

$173

.1

$264

.0

$190

.5

$169

.6

$215

.4

$211

.2

$49.

0

403

475446

285

362 370

441467

530582

528

432390

224

39

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*


Real assets fundraising activity

Zane Carmean Senior Data [email protected]

Real assets fundraising figures came in at $49.0 billion raised across 39 funds for the first quarter of 2020, led by Brookfield Infrastructure Fund IV, which reached $20.0 billion with its final close in February. While annual totals have come in above $200 billion each of the last two years, fund counts have dropped considerably from the 2015 peak of 582. More and more capital flowed into the larger, more established managers as the economy expanded. Despite the disruption caused by the COVID-19 pandemic, several mega-funds were able to hold their final fund closings in March and April. The largest fund to close was BlackRock’s Global Energy and Power Infrastructure fund, locking up $5.1 billion in commitments after its April 15 final close. We expect smaller and first-time funds will have a tougher time meeting their targets while the downturn lasts.

As infrastructure has matured, its vehicles have continued to take a greater share of both fund count and capital raised in the real assets category. Managers in the space have become increasingly focused on renewable energy and digital infrastructure, a trend unlikely to reverse anytime soon. Of the 10 largest real assets funds currently raising capital, six are focused on infrastructure and represent about $20 billion in fundraising targets.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

NorthAmerica

Europe

Asia

Oceania

MiddleEast

Africa

Rest ofworld

Real assets funds ($) by region




Real assets

$232

.1

$241

.2

$262

.5

$264

.0

$216

.3

$203

.4

$195

.5

$190

.5

$195

.0

$196

.7

$178

.3

$169

.6

$151

.9

$170

.5

$204

.8

$215

.4

$235

.9

$222

.5

$220

.6

$211

.2

$198

.8

528 541 558582 598

560 538 528484 500 494

432 421 407 413390

364336

312

224183


2015 2016 2017 2018 2019 2020Rolling 12m capital raised ($B) Rolling 12m fund count

Real assets fundraising by 12-month rolling total

$193

$288 $319 $293 $289 $296 $302

$359

$430$460 $439 $449

$528 $532

$0

$100

$200

$300

$400

$500

$600

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

Cumula�ve

Total

2019*

2018

2017

2016

2015

2014

2013

2012

Ove

rhan

g by

vin

tage

Real assets capital overhang ($B)



Asset selection will be key to weathering the downturn. As we highlighted in our recent note, cash flows related to energy, travel and retail property assets have been hammered by demand shocks. This will provide long-run opportunities for well-capitalized investors, although the impact on property managers is likely to last well into the recovery. Investments in industrial and digital infrastructure have held up well as store closures and

work-from-home policies have increased demand for warehouses and server farms. Clear evidence of that came from Blackstone’s Q1 earnings release, which noted its real estate holdings (heavily weighted toward industrial properties) did not have as large of a downturn compared to the firm’s other strategies.


https://files.pitchbook.com/website/files/pdf/PitchBook_Q2_2020_Analyst_Note_Real_Assets_Funds_in_Times_of_Crisis.pdf

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

Infrastructure

Real estate

Oil & gas

Other

Quartile distribution of time (months) to close real assets funds

0

5

10

15

20

25

30

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Real assets funds ($) by type

$5B+

$1B-$5B

$500M-$1B

$250M-$500M

$100M-$250M

Under$100M

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

Real assets funds ($) by size

Real assets





2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*0

1

2

3

4

5

Quartile distribution of time (years) between real assets funds



Funds of funds$4

9.2

$71.

3

$61.

6

$46.

4

$23.

6

$26.

1

$38.

7

$22.

5

$37.

1

$32.

1

$19.

4

$25.

5

$24.

7

$18.

1

$11.

6

175

204194

142

106125 122

111

142

111104 100

85

57

13

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*


FoF fundraising activity

Hilary Wiek, CFA, CAIA Senior Analyst, Fund Strategies and [email protected]

Since the GFC, FoF figures have dropped off for both capital raised and number of funds closed as LPs have found other access points into private markets. Often at the expense of FoF, investors are putting large sums to work through separate accounts and co-investment programs, figures that are less likely to be captured in fundraising totals. That said, the first quarter saw 13 FoF close on a total of $11.6 billion, a small sum compared to buyout and VC totals, but still representing a large number of allocators who value the easy access to either diversified exposure to the private markets or the specialized expertise of vehicles such as VC FoF. While this method of implementing a private market allocation has not seen the growth trajectory of primary fund commitments, we believe that there will continue to be several dozen fund launches each year hoping to serve the needs of allocators looking for the solutions FoF provide. Four funds greater than $1 billion did close during the quarter, but most noteworthy for FoF in February was the announcement that Vanguard is partnering with HarbourVest to offer PE funds to qualified institutional

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

NorthAmerica

Europe

Asia

Oceania

MiddleEast

Africa

Rest ofworld

FoF ($) by region

2 : “Vanguard and HarbourVest Announce Private Equity Partnership,” HarbourVest, February 5, 2020



customers of Vanguard.2 Many believe this is a precursor to PE for the masses, a set of asset owners Vanguard knows a thing or two about. This could signal a rebirth for FoF if the initiative finds success.


https://files.pitchbook.com/website/files/pdf/PitchBook_Q2_2020_Analyst_Note_Primer_on_Private_Market_Access_Points.pdf

https://www.harbourvest.com/news/vanguard-and-harbourvest-announce-private-equity-partnership

Funds of funds

$31.

2

$34.

6

$37.

6

$32.

1

$25.

7

$22.

8

$19.

0

$19.

4

$18.

6

$21.

1

$23.

9

$25.

5

$27.

5

$23.

3

$19.

9

$24.

7

$17.

9

$19.

4

$19.

7

$18.

1

$26.

4

136 134 135

111105

9993

104

90 95 95 100 9989

85 85

71 71 7057 54


2015 2016 2017 2018 2019 2020


FoF fundraising by 12-month rolling total

$136

$166$173 $170 $168

$154$138

$123$117

$106$90

$81$74 $69

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

Cumula�ve

Total

2019*

2018

2017

2016

2015

2014

2013

2012Ove

rhan

g by

vin

tage

FoF capital overhang ($B)




Funds of funds

$1B+

$500M-$1B

$250M-$500M

$100M-$250M

$50M-$100M

Under$50M

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*

FoF ($) by size

0

5

10

15

20

25

30

35

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Quartile distribution of time (months) to close FoF



0

1

2

3

4

5

6

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Quartile distribution of time (years) between FoF



Secondaries

Hilary Wiek, CFA, CAIA Senior Analyst, Fund Strategies and [email protected]

At $21.9 billion, secondaries strategies had a record quarter for fundraising, mainly on the back of Lexington Capital Partners IX, which closed on $14.0 billion in January. This fund had been in the market for 23 months, so while this year will be credited for the final close, its vintage will be 2018 for the purpose of measuring performance. In terms of fund count, 10 funds closed was by no means a record, that having been set in Q4 2013 at 16. Growing fund sizes have meant that fewer funds can manage a record haul.

As the funds that closed in the first quarter took an average of 14.7 months to close, the substantial level of commitments is more an indication of how hot 2019 was, rather than a reflection of the current environment. These funds will contribute to the $119.0 billion in dry powder already seeking secondaries deals just as LPs have stepped to the sidelines in terms of offering up stakes for sale. We are hearing that even March 31 GP fund valuations will not fully reflect the new environment, so LPs will have to wait until late in the third quarter before they have an indication of what their funds are now worth. As we wrote in March, players in the secondaries market are expecting few transactions to close until at least the fourth quarter. In terms of fundraising through

$19.

0

$16.

9

$12.

0

$21.

0

$15.

1

$15.

0

$22.

9

$25.

5

$33.

4

$25.

2

$35.

9

$37.

2

$28.

3

$23.

6

$21.

9

2927 27

30 31 31

3739

44

23

41

3635

25

10

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*Capital raised ($B) Fund count

Secondaries fundraising activity

the rest of the year, it is likely that new entrants to this space will find it difficult to gain traction, though several established players are in the market with large funds and will continue to find LPs receptive. StepStone, which was raising its fourth secondaries opportunities fund, was able to close on $2.1 billion in the early days of April.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*

NorthAmerica

Europe

Asia

Oceania

MiddleEast

Africa

Secondaries funds ($) by region





Secondaries

$34.

7

$33.

7

$26.

7

$25.

2

$26.

5

$30.

2

$34.

0

$35.

9

$38.

8

$42.

3

$42.

8

$37.

2

$38.

5

$25.

9

$30.

6

$28.

3

$20.

3

$14.

6

$19.

4

$23.

6

$43.

5

38

3024 23

25

30

3841

35 3735

36

45 44 43

35

29

20 2225

28


2015 2016 2017 2018 2019 2020


Secondaries fundraising by 12-month rolling total

$40$36

$43$38

$50$52

$58$78 $76

$86$92

$109

$130$119

$0

$20

$40

$60

$80

$100

$120

$140

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

Cumula�ve

Total

2019*

2018

2017

2016

2015

2014

2013

2012

Ove

rhan

g by

vin

tage

Secondaries capital overhang ($B)




Secondaries

0

5

10

15

20

25

30

35

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Quartile distribution of time (months) for secondaries funds to close

$5B+

$1B-$5B

$500M-$1B

$250M-$500M

$100M-$250M

Under$100M

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*

Secondaries funds ($) by size



0

1

2

3

4

5

6

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*


Quartile distribution of time (years) between secondaries funds



Top funds by sizeTop PE funds to close in Q1 2020 by size

Top VC funds to close in Q1 2020 by size

Fund name Fund size ($M) Close date Fund step-up Fund city Fund country

Platinum Equity Capital Partners V

$10,000 January 7, 2020 1.5x Los Angeles US

Trident VIII $7,000 January 14, 2020 1.3x Greenwich US

Baring Asia Private Equity Fund VII

$6,500 January 21, 2020 1.6x Hong Kong Hong Kong

Odyssey Investment Partners Fund VI

$3,250 February 13, 2020 1.6x New York US

Carlyle Japan Partners IV

$2,391 March 25, 2020 2.4x Tokyo Japan


Tiger Global Private Investment Partners XII

$3,750 January 30, 2020 1.0x New York US

New Enterprise Associates 17

$3,600 March 11, 2020 1.0x Menlo Park US

Founders Fund Growth $1,500 February 19, 2020 N/A San Francisco US

GL Ventures $1,420 February 26, 2020 N/A Beijing China

Battery Ventures XIII $1,200 February 12, 2020 1.5x Boston US




Top funds by size

Top private debt funds to close in Q1 2020 by size

Top real assets funds to close in Q1 2020 by size


GSO European Senior Debt Fund II

$5,028 March 18, 2020 2.3x London UK

Ardian Private Debt IV $3,341 January 22, 2020 1.5x London UK

AG Credit Solutions Fund

$1,800 February 11, 2020 N/A New York US

AlbaCore Partners Fund II

$1,655 February 13, 2020 0.9x London UK

Bridge Debt Strategies Fund III

$1,600 January 15, 2020 0.9x Salt Lake City US


Brookfield Infrastructure Fund IV

$20,000 February 7, 2020 1.4x Toronto Canada

ArcLight Energy Partners Fund VII

$3,375 February 4, 2020 0.6x Boston US

Energy Capital Partners IV

$3,300 January 21, 2020 0.7x Short Hills US

Westbrook Real Estate Fund XI

$2,506 March 9, 2020 0.9xPalm Beach Gardens

US

iCON Infrastructure Partners V

$2,104 March 30, 2020 1.6x London UK




Top funds by size

Top FoF to close in Q1 2020 by size

Top secondaries funds to close in Q1 2020 by size


Mercer Private Investment Partners V

$2,700 February 6, 2020 13.4x Saint Louis US

HarbourVest Partners XI-Combined

$2,610 January 15, 2020 2.2x Boston US

Manulife Private Equity Partners

$1,566 January 10, 2020 N/A Toronto Canada

GoldPoint Partners Select Manager Fund IV

$678 January 22, 2020 N/A New York US

YIELCO Private Debt $361 February 3, 2020 N/A Munich Germany


Lexington Capital Partners IX


ICG Strategic Secondaries Fund III


Madison International Real Estate Liquidity Fund VII

$1,200 March 9, 2020 0.9x New York US

Five Arrows Secondary Opportunities V

$1,114 January 9, 2020 2.2x London UK

Greenspring Secondaries Fund IV

$800 January 6, 2020 1.6x Owings Mills US




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