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The private capital secondary market had a banner year in 2017, as record fundraising was matched by record transaction activity. Secondary buyers are increasingly targeting alternative transaction types. However, competition is rising, and buyers said that pricing was higher in 2017 than the year before.
Half of hedge fund investors believe that public equity markets are either at a peak or in a recession phase. As such, the largest proportion since December 2013 is looking to allocate more capital to hedge funds, as they align their portfolios defensively.
Preqin’s year-end survey of private equity fund managers finds that high pricing is impacting performance expectations. While most managers remain confident in their ability to deliver returns, a third now plan to reduce the targeted returns of their upcoming funds due to valuations concerns.
Preqin’s year-end survey finds that four out of 10 alternative investment consultants feel private debt has outperformed their expectations in 2017 – the highest proportion of any asset class. As a result, the majority recommend that investors increase their allocations to private debt in 2018.
The unlisted infrastructure industry in North America is well-placed to respond to the recently announced framework for the US Government infrastructure plan. Funds focused on the region celebrated their second consecutive record-breaking year in 2017, with unprecedented levels of both fundraising and deal making activity.
The Preqin All-Strategies Hedge Fund benchmark generated returns of 2.18% in January – the strongest start to a calendar year since 2013. All leading strategies and regions posted positive performance for the month, the sixteenth consecutive one in which the industry has recorded overall gains.
As the private equity industry has seen an unprecedented period of fundraising, first-time fundraising has maintained stable levels. Despite investors increasing their allocations to the asset class, many are choosing to recommit to established fund managers, and so debut funds are accounting for a falling proportion of activity.
2017 saw record private equity real estate deal value, with 5,191 deals announced worth $287bn. North America was the only region to see declining deal levels: Europe saw record deal activity and deal value in Asia doubled from the previous year.
The hedge fund industry produced positive returns in every month of 2017, gaining 11.41% across the year. Stronger performance has improved investor confidence, prompting four quarters of net inflows totalling almost $50bn across the year. This in turn has helped push industry AUM to a new record of $3.55tn.
The private debt industry has tripled in size since the end of 2007, reaching $638bn in assets as of the end of June 2017. Although the net flow of capital to investors has been negative in 2015 and 2016, each year saw more than $90bn in distributions, and H1 2017 alone recorded a further $71bn in capital returned.
As of the end of June 2017, private equity assets have reached a new record of $2.38tn, as the industry grew by almost 10% in six months. However, while 2016 saw more than half a trillion dollars distributed to investors, in H1 2017 funds returned $233bn – a significant sum, but behind 2016’s pace.
While 2016 saw a record $100bn in net capital flow to investors, 2017 is failing to match that pace. Distributions in H1 2017 were nonetheless high at $84bn, and investors remain satisfied with the performance of the asset class. Eighty-four percent intend to maintain or increase their commitments from 2017 to 2018.
The infrastructure industry has tripled in size since 2009, with AUM reaching a record of $418bn as of June 2017. Fundraising surpassed $65bn, driving dry powder past $150bn for the first time. Given these successes, it is unsurprising that 93% of investors feel their investments have met or exceeded expectations in 2017.
The unlisted natural resources industry has returned record levels of capital to investors since the start of 2016: $77bn in that year, and a further $48bn in the first half of 2017. Despite strong distributions and performance, 19% of investors plan to commit less capital in 2018, greater than the 11% looking to commit more.
As the private equity market has swelled, fund managers have been matching and exceeding their target sizes with increasing frequency. In fact, growing proportions of private equity funds are reaching or surpassing their stated hard caps, with over half of funds closed in 2015-17 meeting or exceeding their hard caps.
Hedge funds recorded 12 positive performance months in 2017, the first time the Preqin All-Strategies Hedge Fund benchmark has seen a calendar year of gains. This consistent performance pushed the industry to its highest annual return since 2013, as funds returned 11.41% through the year.
The 2017 Preqin Private Capital Fundraising Update looks at fundraising activity for the year across the industry as a whole, and in each individual asset class. It also examines the state of the fundraising market going into 2018.
2017 saw 4,191 private equity-backed buyout deals announced, worth a combined $347bn. This is broadly on par with the $340bn in deals announced in 2016. Asia marked a banner year, as two record-setting acquisitions pushed total deal value to $63bn. However, exit activity fell for the third consecutive year, totalling $250bn.
2017 was a record year for venture capital-backed deals, with 11,144 deals announced worth an aggregate $182bn. This surpasses the previous record of $148bn set in 2015, but does not approach the number of deals made in that year. Venture capital-backed exits also saw a slight uptick, as 1,151 exits were made for total of $71bn.
A total of 2,378 infrastructure deals were completed in 2017, worth a combined $337bn. While this is on par with the number of deals announced in 2016, aggregate value has fallen sharply. Activity in Europe and North America rose from the previous year, but Asia saw a significant decline.
In recent years there has been a sharp rise in the number of venture capital-backed companies achieving unicorn status, with 276 firms achieving valuations of $1bn or more since 2013. While unicorns make up just 2% of the number of venture capital deals, they account for 37% of total venture capital deal value in 2017 YTD.
The Preqin All-Strategies Hedge Fund benchmark generated incremental gains in November of 0.40%, making it the thirteenth consecutive month of positive returns. This has helped increase the year-to-date figure to 9.93%, cementing the expectation that it will be the best annual performance for hedge funds since 2013.
The average management fee charged by private debt funds has fallen to a 10-year low among 2017 vintage funds, with a median of 1.50% and a mean of 1.52%. However, there is a lot of variation in fees between different debt types, and for some strategies average fees remain significantly above this level.
First-time venture capital funds have posted higher median net IRRs than their established peers in eight of the past 10 vintage years. This outperformance may help explain the large number of first-time venture capital funds in market, which has increased by 26% over the 12 months to the end of September 2017.
Pricing volatility in currency and energy markets has created a challenging performance environment for CTAs in 2017 so far. As at the end of September, the Preqin All-Strategies CTA benchmark has recorded year-to-date losses of 0.04%, compared to gains of 8.04% for the All-Strategies Hedge Fund benchmark.
The India-based private equity market has seen a considerable expansion in its assets under management in recent years, growing from $6bn as of the end of 2006 to $24bn at the end of 2016. 2017 YTD has seen a record number of fund closures, and the pace of new funds coming to market is accelerating.
Core and core-plus funds account for the majority of the unlisted infrastructure market, with over a quarter of a trillion dollars in combined assets. However, higher-risk approaches such as value added funds account for an increasing portion of the market, having shown more aggressive growth in AUM in recent years.
Hedge funds recorded positive net asset inflows of $19.2bn in Q3 2017, bringing year-to-date net inflows to $43.9bn. Credit strategies and multi-strategy funds experienced the greatest net inflows, while macro strategies, CTAs and relative value strategies all saw net outflows through the quarter.
Hedge funds generated 1.15% in October, the twelfth consecutive month of positive returns. With year-to-date returns climbing to 9.30%, the hedge fund industry remains on track to generate its best performance since 2013.
Women make up an average of 21% of staff at venture capital funds. This proportion falls to 11% of senior staff, and just 6% of board members at venture capital firms. However, women-owned funds are securing more capital and making more deals in 2017.
The number of new private capital firms being founded each year decreased in the wake of the Global Financial Crisis. However, in recent years the growth in the number of active firms has rebounded: there are now 7,500 active private capital firms worldwide, employing almost 200,000 members of staff.
Private equity fund of funds managers have been exploring new avenues to appeal to investors and attract capital. For example, many have shown interest in investing in first-time funds, as well as differentiating themselves from other firms by making greater use of alternative investment methods.
Despite bigger private real estate funds attracting large amounts of investor capital, smaller funds have generated higher average returns, and are consistently outperforming mid-size and larger funds. Although smaller funds post higher average returns, they do so with greater volatility and a greater spread of performance.
Just 13 Asia-focused distressed debt funds have closed in the past decade. However, in October 2017 there are six funds raising capital to acquire distressed assets in the region. This could be due to burgeoning concerns about debt levels in India and China.
Private capital firms have been expanding over the past year: the majority added to their headcount from 2016 to 2017, and this trend looks set to continue in the year ahead. In order to attract top talent, almost four out of five firms increased their base salaries from 2016 to 2017, and 68% intend to raise them from 2017 to 2018.
Over the past decade, the fund of hedge funds industry has seen assets under management decline to $798bn in June 2017, as investors have increasingly favoured investing directly themselves. In order to combat the challenging environment, fund of hedge funds managers have increasingly turned to M&A activity.
Q3 2017 saw 1,170 private equity real estate deals announced, worth a combined $56bn. This represents a further uptick in deal volumes from Q2, but a decrease in overall deal values. Residential and hotel assets saw significant increases in their share of deal values, while industrial and retail assets continue to diminish.
The Preqin All-Strategies Hedge Fund benchmark returned 1.43% in September, the highest monthly gain since January, as all top-level strategies saw positive performance. Year-to-date returns now stand at 8.28%, the highest performance the industry has seen at this stage of the year since 2013.
Preqin’s latest overview of women in alternative assets finds that just under one in five employees at fund management firms are female. This rate varies widely by role, and consistently declines according to seniority, with the average proportion of women among senior staff at 11% across the alternative assets industry.
Six private capital secondaries funds closed in Q3, securing $5.4bn. 2017 has now seen 25 secondaries funds raise a total of $29bn, matching the previous full-year fundraising record for secondaries funds set in 2014. Additionally, the industry is continuing to diversify and specialize.
In this update covering Q3 2017, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q4.
The venture capital-backed deal industry has registered a second consecutive record-breaking quarter, as 2,362 deals were announced worth a combined $49bn. Deal activity in the first three quarters of 2017 is at $128bn, and the year is on course to see an all-time high even as the number of transactions continues to decline.
The infrastructure deals market saw 365 deals announced in Q3, worth $88bn. While aggregate deal value has rebounded from Q2, the number of deals announced has continued to fall. As a whole, Q1-Q3 2017 has marked a significant slowdown compared to the same period the previous year.
The private equity-backed deals market remained strong in Q3, with 953 deals announced worth $92bn; it looks as though 2017 is on course to see deal activity on par with that of 2016. While North America did see decreased deal activity, the quarter marked the largest ever private equity buyout deal in Asia.
Almost half of hedge fund investors reported in June that they were planning on reducing their allocations in the next 12 months, primarily due to underwhelming three-year performance. When making new investments, investors are faced with nearly 15,000 hedge funds with widely varying returns within and between leading strategies.
Since 2013, emerging infrastructure fund managers have struggled to raise capital and the number of emerging funds closed annually has fallen 50% from 2013 to 2016. At the same time, the disparity between the average size of funds raised by emerging managers and established managers has steadily increased.
Preqin’s latest survey of hedge fund investors finds that the proportion that feel their portfolios have met expectations has doubled in the past 12 months. However, investor concerns have not entirely subsided and almost half now say they intend to reduce their allocation to the asset class.
Preqin’s Real Estate Top 100 report finds that in the last decade, the 100 largest private real estate fund managers have collectively secured 62% of all fundraising for the asset class. The 20 largest funds alone have secured almost $150bn in investor capital.
Asia-focused buyout funds are set to mark a record year in 2017. Fundraising has reached $23bn as of August, and is on course to surpass the record $24bn raised in 2014. However, other sectors of the industry have not kept pace, and buyout deal activity has slumped in recent years.
Investors based in Australia and New Zealand allocate to private equity at a rate almost 20 percentage points below the global average, instead favouring allocations to real estate and real assets funds. This trend is mirrored by the distribution of assets held by fund managers in the two countries.
Private equity buyout funds have returned more than 10% on average in every vintage year since 2006, and the spread of performance is among the smallest of any segment of the industry. With assets totalling $1.49tn, they now account for over half the global private equity industry.
The Preqin All-Strategies Hedge Fund benchmark returned 0.97% in August, increasing its run of positive performance to 10 consecutive months. All leading strategies made gains, with equity and macro strategies funds each returning 1.07% for the month.
Preqin’s survey of private real estate fund managers gauges their predictions for the industry in 2020. It finds that firms expect industry assets and their own ranks to expand, but many forecast that there will be some consolidation over the next three years.
Preqin’s latest survey of institutional investors in alternative assets finds that they are generally satisfied with the performance of their portfolios over the past 12 months. However, across all closed-end private capital asset classes, investors have raised concerns over high asset valuations.
Preqin’s 2017 Alternative Assets Performance Monitor finds that the industry reached a record $7.8tn in AUM as of the end of 2016. The report also examines horizon returns, public market equivalents, and top performing funds and firms across each alternative asset class.
Preqin’s H2 2017 Real Estate Fund Manager Outlook finds that firms are adapting their approach in response to increased pressure on the dealmaking environment. Three-quarters of fund managers say it is more difficult to find attractive investment opportunities compared to last year, and over a third are reviewing more opportunities.
Asia marked a record quarter in Q2 2017, as $47bn in venture capital deals were announced. Overall, the region accounts for almost half of global activity in 2017 so far. However, fundraising and exit activity is not keeping pace, with momentum slowing in these parts of the investment cycle.
Hedge funds recorded positive asset inflows in Q2 2017 totalling $5.0bn, but this did not approach the $19.7bn inflows seen in Q1. Additionally, capital flows were not even across the industry: while CTAs saw the greatest net inflows in Q2, equity strategies funds recorded their sixth consecutive quarter of outflows.
Net inflows to hedge funds totalled $25bn in H1 2017, and the industry recorded its highest H1 performance since 2009. However, fund managers predict net asset flows will be flat or negative in H2 2017, and believe that investor sentiment is more negative than it was 12 months ago.
Renewed focus on infrastructure projects in North America has benefitted the unlisted infrastructure market in the region. Already the largest infrastructure market in the world, 2016 was a record year for North America and 2017 seems to be on path to continue last year’s momentum.
The majority of private equity fund managers have seen increased investor appetite for the asset class in the past 12 months. However, growth in investor interest is matched by the growing number of funds seeking capital, and fund managers are therefore seeing more competition for fundraising.
Investors view mezzanine funds as one of the most promising areas of the private debt market, leading to increased fundraising for the fund type in recent quarters. While 2016 saw a record year for mezzanine fundraising, it does not seem as though 2017 will match that total, and the number of funds in market is in decline.
The result of the UK-EU referendum has created an uncertain future for the private real estate market in the UK. Deal flow in the country has declined while activity in the rest of Europe has increased over the past 12 months.
Venture capital fund managers do not feel that it is becoming more difficult for them to source deals in 2017, despite a climate of increasing competition. Almost half of fund managers surveyed by Preqin agree that there is greater competition for deals compared to 12 months ago, but firms remain confident in their ability to source attractive investment opportunities.
Preqin’s inaugural Natural Resources Top 100 report examines the largest fund managers and investors active in the asset class in 2017. The biggest firms account for four-fifths of fundraising over the past decade, while the biggest investors have over $100bn allocated to natural resources investments.
Investors based in Asia-Pacific have allocated more capital to hedge funds in recent years, reaching a record $202bn as of the end of 2016. The majority of capital invested in hedge funds by Asia-Pacific-based investors comes from sovereign wealth funds, while some investors made their first investments in hedge funds in 2016.
The closure of Apollo Investment Fund IX, which has become the largest ever private equity fund at $24.7bn, brings total private equity fundraising in the first seven months of 2017 to $269bn. Two of the top 10 largest ever private equity funds have now closed within the past two months.
The 2017 Preqin Private Capital Fund Terms Advisor finds that several private capital fund types are raising their management fees. Buyout, real estate and infrastructure funds have all seen 2017 vintage funds and those currently in market charge higher mean fees than funds of previous vintages.
Fundraising for private capital secondary vehicles slowed sharply in Q2 2017, following record activity seen the previous quarter. However, collectively H1 2017 has seen secondary funds raise almost four-fifths of the record capital total marked in 2014, putting this year on course to be the largest ever for secondaries funds.
The private equity real estate industry saw 887 deals recorded in the second quarter of 2017 worth a combined $63bn, a significant uptick from the slow activity recorded in the previous quarter. Larger assets drove activity, accounting for almost one in five transactions in Q2, and more than half of total deal value.
The hedge fund industry continued its recent run of consistent gains in June, returning 0.57% for the month. This has pushed 2017 YTD returns to 4.87%, the highest H1 performance since the first half of 2009. It is also the first time since 2007 in which the first six months of the year have all recorded positive returns.
The assets held by private equity funds focusing on investments in emerging markets have increased at a rapid rate in recent years, reaching $564bn as of September 2016. Assets have more than doubled since 2010, and increased sixfold in the past 10 years.
Preqin’s latest research finds that emerging hedge funds with a three-year track record or less have posted higher performance over 12-month and 3- and 5-year time horizons compared to the wider industry. At the same time, the volatility of these emerging funds has recently converged with that of hedge funds as a whole.
In this update covering Q2 2017, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q3.
The private equity-backed deals market saw signs of recovery in Q2, after a slowdown in Q1: 1,001 deals were announced worth a total of $83bn, up from $55bn in deals announced the previous quarter. However, while North America and Asia saw robust activity, Europe saw deal values slump to their lowest level since Q1 2016.
The venture capital-backed deal market has recorded its largest ever quarter in Q2, as 2,062 deals were announced worth a combined $47bn. This surpasses the previous record of $43bn recorded in Q3 2015, helped in part by the largest ever venture capital deal, Didi Chuxing’s $5.5bn financing in April.
The infrastructure deals market saw 277 deals announced in Q2, worth a combined $51bn. This continues the significant slowdown seen in 2017 so far, after every quarter from Q3 2015 to Q4 2016 saw deal values exceed $100bn. In fact, Q2 2017 has seen the fewest deals announced since Q3 2009.
The hedge fund industry faces a challenging environment in Europe: assets under management in the region declined to $657bn in 2016, and net investor outflows have continued into Q1 2017, despite recent positive performance.
Private equity funds closed in 2017 so far are spending less time on the road to raise more capital than in any year previously. The biggest and most consistent top performing firms in particular are raising capital faster and more successfully than their peers.
The Preqin All-Strategies Hedge Fund benchmark returned 0.26% in May, marking the seventh consecutive month of positive returns for the industry. Hedge funds have recorded gains of 4.37% in 2017 YTD, and 10.33% over the past 12 months, surpassing most investors’ expectations for the industry.
Sovereign wealth fund investors are increasingly looking to make private debt investments an element of their portfolios. Almost 40% now actively invest in the asset class, including two-thirds of those managing $250bn or more, and all of those managing $100-249bn.
The Billion Dollar Club of investors which allocate $1bn or more to real estate has grown to 433 members in 2017. Collectively, these investors hold more than $39tn in AUM, and represent more than four-fifths of institutional capital in the asset class.
Unlisted natural resources fundraising focused on renewable energy has outstripped fundraising for conventional energy in 2017 so far. Furthermore, renewable-focused funds currently in market are more numerous and seeking more capital than their conventional energy-focused counterparts.
The recent launch of Blackstone Infrastructure I demonstrates the long-term trend towards capital concentration in the infrastructure market. Funds closing on $1.5bn or more have accounted for three-quarters of the total capital raised in 2016 and 2017 so far.
The Billion Dollar Club of hedge fund investors allocating $1bn or more to the industry has grown in the 12 months to June 2017, and now stands at 242 institutions. Collectively, these investors allocate $805bn to the industry, accounting for almost a quarter of total hedge fund assets.
Investor appetite for direct lending in the US has grown steadily in recent years, and assets in the sector have now reached almost $100bn. Interest in the sector is focusing on the lower middle market in particular, with investors viewing it as an attractive alternative to fixed income products.
The Europe-focused infrastructure market is developing at a rapid rate, with both fundraising and dealmaking hitting record levels in recent years. As a result, total assets under management in the region have reached $109bn as of June 2016, a new record.
The hedge fund industry saw net inflows totalling $19.7bn in Q1 2017, with the total assets held by hedge funds increasing by 3.2% to reach a record $3.35tn.
The Preqin All-Strategies Hedge Fund benchmark returned 0.76% in April, its sixth consecutive month of positive performance. Macro strategies funds saw their second consecutive month of losses, but all other leading hedge strategies made gains. 12-month performance for the industry now stands at 10.67%.
Total assets managed by the global venture capital industry reached $524bn as of June 2016. The industry has almost doubled in size from the $271bn in AUM it held at the end of 2008. This increase comes despite funds returning record levels of capital back to investors, distributing $42bn in H1 2016 alone.
Emerging private real estate fund managers are finding fundraising increasingly difficult, despite posting higher returns than their more experienced counterparts. Just 36% of investors would currently commit to funds operated by emerging managers, and these vehicles account for just 10% of capital raised by real estate funds in 2016.
A quarter of all hedge fund managers surveyed by Preqin at the end of 2016 had changed at least one service provider over the preceding 12 months. Cost and quality of service were the factors most frequently cited by firms as the reasons they changed provider.
Private debt fund managers intend to deploy more capital in 2017, despite an environment of high valuations and stiff competition. Almost 80% of managers said they were planning to invest more in 2017 than in 2016, and no firms reported to Preqin that they are looking to decrease investment levels.
Sixty-three percent of sovereign wealth funds currently hold allocations to real estate, a higher proportion than invest in almost any other asset class. Primarily, these investors look to commit directly to real estate projects, rather than invest in commingled real estate funds.
Secondaries firms attracted a record level of investor capital in Q1 2017, as six funds raised $14bn, surpassing the previous all-time high of $13bn secured in Q4 2014. The closure of $7.5bn Strategic Partners Fund VII drove fundraising in the quarter, while three more vehicles in excess of $1bn closed through Q1.
There are currently a record 1,908 private equity funds on the road, targeting an all-time high of $635bn in investor capital. Vehicles currently in market include some of the largest ever raised: the top 10 largest alone are seeking a combined $203bn, 32% of the total sought by the entire industry.
The Preqin Quarterly Update: Hedge Funds, Q1 2017 finds that the continued losses posted by CTAs in Q1 are having a negative effect on investor demand, with searches for CTAs falling by eighteen percentage points from the previous quarter.
Private equity real estate managers reduced their investment activity in Q1 2017, with both the number and aggregate value of transactions showing a decline. In total, 568 deals were completed for a combined $38bn, down from the previous quarter when 853 transactions were worth a total of $57bn.
The hedge fund industry maintained its positive start to 2017 with gains of 0.68% in March, and the Preqin All-Strategies Hedge Fund benchmark is now recording Q1 2017 performance of 3.18%, marking the best opening quarter since 2013.
The total assets under management held by sovereign wealth funds rose 1% to $6.59tn in March 2017, up from $6.51tn a year earlier, marking a slowdown in the rate of growth compared to previous years.
A November 2016 survey conducted by Preqin finds that hedge fund investors in Asia-Pacific are mixed on their future allocations to the asset class, but remain more positive about the industry compared to investors in other regions.
Private capital secondaries fund managers saw an increase in dealmaking activity through 2016, and predict that this momentum will continue through the year ahead.
In this update covering Q1 2017, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q2.
Global venture capital-backed deal activity increased in Q1 2017, as 2,420 deals were recorded, worth a combined $31bn, putting the quarter comfortably ahead of the level of activity seen in Q3-4 2016.
Infrastructure firms maintained the pace of deal flow in Q1 2017, with 339 deals completed for a combined $85bn, far lower than the aggregate transaction value of $127bn recorded in the previous quarter.
Private equity-backed buyout deal activity fell markedly in Q1 2017, as 970 transactions were announced for an aggregate $53bn, although this level of activity remains on par with Q1 2016.
Asia-focused venture capital fundraising has been robust in recent years, totalling more than $43bn since the beginning of 2014. 2017 could mark a landmark year for the region: almost 200 funds are currently seeking over $50bn from investors, and have already secured more than half that via interim closes.
Preqin’s latest survey of 276 hedge fund managers finds that in the wake of high-profile investor redemptions, three-quarters now indicate they are willing to reduce their fees. Many also intend to spend more on marketing in the year ahead, in a bid to overcome investor scepticism about the value of investing in hedge funds.
Launched today, the 2017 Preqin Global Private Debt Report finds that the assets held by the industry grew by $40bn in the first half of 2016. As of the end of June, private debt funds globally hold $595bn in assets under management.
Preqin today launches its 2017 Global Natural Resources Report, which finds that the total assets held by unlisted natural resources funds reached $455bn as of June 2016. The industry has grown by almost $50bn in six months, and has tripled in size since 2008.
The Preqin All-Strategies Hedge Fund benchmark recorded returns of 1.18% in February, building on the 1.43% gains seen the previous month. The industry has now recorded 11 months of positive gains in the past year, and 12-month performance has consequently risen to 13.63%, the highest level seen since May 2013.
The average management fee charged by private debt funds has been on a downward trend over the past four years, and reached an eight-year low among 2016 vintage funds. Direct lending funds charge the lowest fees, whereas venture debt funds have the highest average fees.
A Preqin survey of manager and investor attitudes to co-investments finds that more than two-thirds of all real estate firms offered co-investment rights to investors in 2016. Furthermore, over three-quarters of real estate funds currently in market offer co-investment opportunities.
A Preqin survey of over 180 real estate fund managers finds that two-thirds of firms intend to deploy more capital in 2017 compared to the previous year. Managers see valuations as a key concern for the year ahead, as dry powder has reached record levels and pushed asset pricing upwards.
Institutional investors in real estate are positive about the performance of the asset class over the past 12 months. However, they are concerned about the prospect of maintaining the rate of return seen in recent years through 2017, and consequently some are choosing to limit their exposure to real estate over the short term.
Preqin’s latest survey of hedge fund investors finds that twice as many intend to reduce their exposure to the asset class in 2017 than are looking to increase it. However, some leading strategies are more at risk than others, as investors seek to allocate to those funds they believe can best fulfil their objectives.
Preqin’s H1 2017 Investor Outlook finds that institutional investors are looking for exposure to an ever-widening range of alternative asset classes. A third of investors now commit to four or more asset classes, up from a quarter that did so a year ago, and almost one in ten invest across all alternatives.
The hedge fund industry saw net outflows totalling $110bn in 2016, despite posting their best annual return since 2013. The rate of redemptions accelerated over the year with $43bn withdrawn in Q4, and every leading strategy recorded net outflows for the year.
Preqin today announces the launch of Preqin Solutions, a cloud-based tool that streamlines the portfolio management process for private capital fund managers and investors. The creation of the division follows the acquisition of Baxon Solutions by Preqin in November 2016, and builds on Baxon’s 11-year track record catering to the industry.
Preqin’s latest survey of unlisted infrastructure fund managers finds that they are seeing greater competition for lower-risk core assets compared to projects further up the risk/return curve. This pressure for opportunities is driving up pricing, a key concern for a majority of managers in 2017.
The Preqin All-Strategies Hedge Fund benchmark recorded gains of 1.40% in January 2017. This marks the highest monthly gain for the asset class since April 2016, and the best January performance since 2013. Twelve-month industry returns are now in double figures for the first time since August 2014.
Preqin’s survey of almost 400 private equity fund managers finds that increased competition for deals is concentrated on the mid-market. The majority of fund managers see more competition for mid-market assets compared to a year ago, as investor appetite has spurred strong fundraising and a build-up of available capital.
The private equity secondaries market has enjoyed robust fundraising in recent years, and this looks set to continue in the year ahead. 2016 marked the second-highest level of capital ever raised, and several large secondaries vehicles have already closed in 2017, including the fourth largest fund recorded.
Preqin’s Private Equity Top 100 report finds that the largest fund managers and investors are enjoying an increasingly prominent role in the industry. The hundred largest fund managers have collectively raised $1.5tn over the past 10 years, while the biggest investors currently have almost $800bn committed to the asset class.
Drawing on data compiled for its 2017 Global Hedge Fund Report, Preqin has created league tables of the most consistent top performing hedge funds over the past five years. The rankings track funds’ consistency across four metrics: annualized return, annualized volatility, Sharpe ratio and Sortino ratio.
Preqin’s latest investor survey finds that over a quarter of private debt investors feel their portfolios outperformed expectations in 2016. As a result, the majority of respondents intend to commit more to the asset class in 2017 than the year before, and two-thirds intend to increase their allocation in the long term.
The 2017 Preqin Global Private Equity & Venture Capital Report finds that the private equity industry has grown to $2.49tn as of June 2016. This continues eight successive years of growth in the wake of the Global Financial Crisis: the industry has doubled in size since 2006, when global assets stood at $1.16tn.
The 2017 Preqin Global Hedge Fund Report finds that assets held by hedge funds globally reached a record $3.22tn as of the end of November 2016. Industry gains of 7.40% across the year drove this growth, offsetting net investor outflows of $102bn.
The 2017 Preqin Global Real Estate Report finds that funds are returning record levels of capital to their investors. Managers distributed a record $212bn in 2015, and $128bn in H1 2016. This has been driven by strong performance, which has seen real estate annualized returns reach 14.9% over the past three years.
The 2017 Preqin Global Infrastructure Report finds that the total assets under management of the unlisted infrastructure industry reached $373bn as of the end of June 2016, up from $325bn at the end of 2015. Record fundraising has seen assets grow despite record levels of capital being returned to investors.
Preqin finds that Asia-focused fundraising saw its second annual decline in 2016, as 148 vehicles raised $40bn. However, investors cited emerging Asia, China and India as the regions presenting the best opportunities in 2017, and the Asian VC market continues to grow in global significance.
The Preqin All-Strategies Hedge Fund benchmark posted returns of 7.40% in 2016, marking the best performance year for the industry since 2013, and more than tripling the gains made in 2015 (+2.03%).
Preqin’s end-of-year update finds that the global value of infrastructure deals in 2016 reached a record $431bn, up from $362bn seen the year before. This level of activity was driven by strong activity in Asia, as transactions for assets in the region reached $131bn, the highest of any region.
In this update covering activity in 2016, Preqin reviews the closed-end private capital fundraising market as a whole. We also examine each closed-end alternative asset class individually, looking at fundraising through the year and the state of the fundraising market in these asset classes at the beginning of 2017.
2016 saw 3,985 private equity-backed buyout deals recorded globally, which is likely to surpass the current all-time high of 4,006 deals seen in 2014. Exit activity cooled slightly through the year, as 1,682 exits were made, worth a total of $330bn.
2016 was another strong year for the venture capital-backed deal market, as 9,717 deals were announced globally worth a combined $134bn. This is the second consecutive year that deal values have exceeded $100bn, following $143bn in deals recorded through 2015.
The Preqin All-Strategies Hedge Fund benchmark recorded gains of 1.00% in November, as all top-level strategies posted positive performance. North America-focused hedge funds recovered from losses suffered in October (-0.69%) to post returns of 2.89% through November, the greatest of any region.
Five months after the UK’s vote to leave the European Union, Preqin surveyed 276 hedge fund managers and 108 investors to chart the ongoing impact of Brexit on their portfolios. It found that industry participants have become more upbeat about the result, with a third of fund managers saying it has boosted their performance.
North America has extended its dominance in the oil & gas market in recent years. 2015 marked a new fundraising record as 35 funds secured an aggregate $44bn, and 2016 should surpass that total with $34bn raised as of October, accounting for more than three-quarters (76%) of global capital raised in the industry this year.
Preqin’s latest report on hedge fund asset flows finds that total industry AUM grew to $3.24tn as of the end of Q3, owing to robust performance through much of 2016. However, the industry saw net investor outflows of $33bn through Q3, bringing total 2016 YTD outflows to $67bn.
Fundraising for renewable energy-focused infrastructure funds has reached $10bn in 2016 YTD, following a record 2015. At the same time, the total value of deals seen in 2016 so far has reached $43bn, approaching the all-time high of $50bn seen in 2012.
Following Donald Trump’s victory in the 2016 US presidential election, Preqin interviewed 182 alternative assets fund managers in order to gauge their perceptions of the likely impact of the result on their portfolios, and their prospects for the next four years.
Preqin’s 2016 Private Capital Fund Terms Advisor finds that top quartile funds favour fee structures that incentivise strong performance, charging lower management fees, on average, and a higher rate of carried interest and hurdle rates.
The Preqin All-Strategies Hedge Fund benchmark made minimal gains of 0.01% through October, as recent positive momentum tapered off. However, hedge funds have still posted overall gains of 5.46% so far in 2016, and remain on track to record the highest performance year for the industry since 2013.
Preqin’s latest research into employment and compensation practices in the private capital industry finds that less than half of fund managers made firm-wide base salary increases between 2015 and 2016, although those that did made large increases.
Preqin today announces that it has acquired Baxon Solutions, effective immediately. This acquisition represents the next step in the strategic partnership enacted between the two companies in January 2015, and aims to build on the success of the past 2 years.
The private debt industry in Europe has seen five consecutive years of annual fundraising increases since 2010. However, this pattern looks set to be broken in 2016, with the total capital raised so far reaching only half the total seen last year.
Private real estate fund managers returned a record $194bn to their investors in 2015, while calling upon just $93bn of investor capital, the lowest level since 2011. However, there are concerns among both investors and fund managers that asset valuations may impact future returns.
Preqin’s report on first-time private capital funds finds that over recent years they have consistently outperformed vehicles run by established managers. Investor sentiment is increasingly warming to debut managers, with the majority now saying they would invest in a first-time fund.
Preqin’s quarterly update on the hedge fund industry finds that 118 funds launched globally through the quarter. However, Asia-Pacific-based managers accounted for just 3% of new vehicles, a quarter of the proportion seen in Q3 2015.
Preqin’s quarterly update on the private equity industry finds that fund managers returned a record $443bn to investors through 2015, up from $424bn the previous year. Moreover, the capital called up by firms declined through 2015, so private equity investors received record net capital flows of $217bn.
The Preqin All-Strategies Hedge Fund benchmark recorded gains of 0.91% in September, putting overall industry performance in Q3 at 4.06%. This marks the highest quarterly performance since Q1 2013, when funds returned 4.10%.
Preqin’s latest research on the private capital industry in Australia finds that total assets under management in the country have reached a record A$81bn, making it the seventh largest market in the world.
The US is the dominant component of the global hedge fund industry, accounting for 72% of the approximate $3.1tn of total assets. The US hedge fund industry has also seen strong growth in recent years, with inflows of $12bn through H1 2016 and $138bn since the start of 2015.
Preqin’s quarterly update on the private capital secondaries market finds eight funds closed in Q3 to raise a combined $3.8bn of investor capital. This pushes the amount secured through Q1-Q3 to a record $19bn, surpassing the previous fundraising peak of $17bn in 2014.
Preqin’s Q3 update on private equity-backed buyout deals finds that 919 deals were recorded in the quarter worth a combined $90bn. Activity in Europe fell sharply, with aggregate deal value dipping from $27bn in Q2 to $15bn in Q3, as the region recorded its lowest Q1-3 deal value since 2012.
Preqin’s Q3 update on the venture capital industry finds that quarterly aggregate deal value declined from $42bn in Q2 to $26bn in Q3, marking the slowest quarter for deal activity since Q4 2011. At the same time, there were 225 VC-backed exits in Q3 worth a combined $12bn, less than half the total seen through Q2.
Preqin’s Q3 update on the infrastructure deals market finds that there were 289 deals in the quarter worth a combined $75bn. While this represents a slight drop in both the number of deals and the total deal value for a second successive quarter, this is largely a reflection of the record deal flow seen in Q1.
In this update covering Q3 2016, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q4.
Preqin data finds that the unlisted infrastructure debt market is becoming a more significant part of the industry following strong fundraising in recent years. Moreover, there are currently a record 43 infrastructure debt funds in market seeking a combined $25bn.
Preqin research on the unlisted agriculture fund industry finds that recent expansion in the sector has taken the total assets under management to $22bn. Strong fundraising in recent years has been a key driver of this growth with $16bn of capital raised since 2011.
Preqin research finds that investors are maintaining pressure on hedge fund managers to lower fees as performance struggles continue. Just 35% of hedge funds charge the 2 & 20 ‘industry standard’, but the majority of investors say further change is needed.
Preqin’s survey of over 160 institutional private debt investors finds that they view the recent performance of their investments positively, and consequently, many are planning to commit increasing levels of capital to the asset class over the next 12 months.
Preqin’s survey of over 175 institutional investors participating in real assets – comprising infrastructure and natural resources funds – finds that divergent performance trends have produced different outlooks between the two asset classes.
Preqin’s latest report on the private equity industry in Asia finds that in 2016 YTD there has been a decline in activity from the record levels seen in 2015. Overall fundraising and buyout deal activity have fallen sharply, but venture capital deals in the region have maintained momentum.
The Preqin All-Strategies Hedge Fund benchmark saw returns of 0.97% in August, coming down from gains of 2.23% seen in July. Nonetheless, this takes overall industry performance in 2016 YTD to 4.67%, and 12-month performance to 4.86%.
Preqin’s latest research finds that although California is best known for its venture capital industry, the state has seen marked growth and diversification of its alternatives market, as other private capital and hedge fund managers are drawn to the area.
Preqin’s latest survey of venture capital firms found that investor appetite for exposure to the asset class has increased across all regions. However, the largest increase was seen among Asia-based investors; 62% of firms reported increased demand from investors in the region, well above the proportion seen elsewhere.
Preqin’s latest survey of over 490 institutional investors globally shows that while alternative assets remain a crucial component of many portfolios, investors are finding it harder to identify attractive investment opportunities compared to a year ago.
Preqin research into the private equity real estate industry in Asia finds that fund managers located in the region are currently driving fundraising and deal activity, despite some of the largest global firms launching Asia-focused funds.
Preqin releases the 2016 Alternative Assets Performance Monitor, a report examining performance across the alternative assets industry over a range of metrics, including IRRs, consistent performing managers, and public market equivalents.
The 2016 Preqin Alternative Assets Performance Monitor examines the performance of the hedge fund industry over the past 12 months, as both fund managers and instutitional investors believe performance to be the key driver of the change in the asset class at present.
Preqin estimates that there were net outflows of $34bn over H1 2016; the majority of outflows ($20bn) occurred in Q2 2016. As a result, as of 30th June 2016 the hedge fund industry represented a total of $3.1tn in assets under management, down from nearly $3.2tn at the end of 2015.
Preqin’s report on the ‘$1bn Club’ of the largest infrastructure investors and fund managers finds that 82% of these investors commit directly to infrastructure assets, while the largest fund managers account for 85% of aggregate capital raised for the asset class in the last 10 years.
Preqin’s latest survey of over 180 private equity fund managers finds that growing interest from investors and a predicted increase in exit activity has led firms to predict that the industry will continue to grow in assets over the next 12 months.
Preqin’s latest hedge fund performance data update finds that the industry posted overall returns of 2.17% in July, marking the largest cumulative period of positive performance since May 2013, with hedge funds now returning 6.96% since the beginning of March.
Preqin’s report into the unlisted natural resources industry in Africa finds it still at a nascent stage. Fund managers based outside the continent have accounted for 86% of Africa-focused capital raised since 2015, while 69% of active Africa-based firms tracked by Preqin are raising their first ever natural resources fund.
Preqin research finds that real estate debt has grown in prominence over recent years, with fundraising for the strategy reaching $67bn since 2013, while debt vehicles on the road are targeting a record $32bn as of July 2016, up from $23bn a year ago.
Preqin research finds that North America-focused private debt fundraising in 2016 so far is significantly lower compared with 2015. Europe-focused funds closed through the year have attracted more investor capital, raising $16bn compared to $15.7bn for North America-focused vehicles.
Preqin’s report on the infrastructure deals market in Africa finds that the majority of deals completed since 2013 have been for energy projects. Renewable assets, in particular, have attracted significant investment as the focus on power generation in Africa intensifies.
Preqin’s latest survey of over 190 private equity real estate fund managers finds that, with competition driving up the price of assets, the majority of fund managers have reduced the targeted returns of their funds in market.
A Preqin report finds that a record proportion of private capital funds closed so far this year engaged the services of a placement agent, with many of these funds achieving a more successful fundraise than those vehicles that did not employ a placement agent.
Preqin’s Q2 update on the hedge fund industry finds that economic uncertainty following the UK vote to leave the EU has created potential opportunities for hedge fund managers and, as a result, many more funds have launched focused on the region.
Preqin’s latest research into the Asian venture capital industry finds that Q2 2016 marks another record breaking quarter. The region saw $19bn worth of transactions completed, more than North America, largely driven by an all-time high $17bn worth of financings in Greater China.
The Preqin All-Strategies Hedge Fund benchmark reveals that hedge fund performance has stabilised recently; the industry posted gains of 0.15% in June, a fourth consecutive month of positive performance. Q2 returns stand at 2.15%, but gains of 1.36% through the first half of the year represent the worst H1 performance for hedge funds since 2008.
Preqin’s update on the private capital secondaries market finds that the quarter saw the largest ever secondaries fund close, driving the aggregate capital raised in the first half of 2016 to $14bn, an H1 fundraising record.
Preqin’s latest survey of over 270 hedge fund managers finds that the industry is facing increased pressure from investors on fees and transparency, while attempting to overcome a negative perception of the asset class that has arisen partly due to performance issues through the first half of the year.
Preqin’s 2016 Private Capital Fund Terms Advisor finds that recently raised funds are setting higher hurdle rates than in previous years. More broadly, there is mounting evidence to suggest fund managers are making efforts to align their interests with investors’.
Preqin’s annual report on the ‘$1bn Club’ of the world’s largest hedge fund investors, finds that although participants account for only 5% of all active hedge fund investors, they represent nearly a quarter (24%) of the total $3.13tn AUM held by the industry.
In the wake of Britain’s vote to leave the European Union, Preqin has surveyed over 90 institutional investors with exposure to UK real estate. Over half (57%) of all respondents stated that Brexit makes it likely that they will invest less in the UK over the next 12 months, with just 11% expecting to invest more.
In the wake of Britain’s vote to leave the European Union, Preqin has surveyed over 140 alternative assets firms and 50 institutional investors to gauge their reactions. It finds that many fund managers expect performance and investment decisions to be affected, while institutional investors expect to commit less to the UK.
Preqin’s Q2 2016 buyout deals and exits update finds that the total value of private equity-backed buyout deals reached $89bn in the quarter. This is up from the $50bn recorded in Q1, but remains down from the $102bn seen in the same period last year.
The second quarter of 2016 saw 2,244 venture capital deals announced globally worth a combined $40bn. This represents a 9% increase in the aggregate deal value compared to the $37bn seen Q1 2016, but a 12% decrease from the 2,532 deals seen in that period.
The Preqin Q2 2016 infrastructure deals update finds that global infrastructure deal activity slowed in Q2, with just 225 deals concluded worth $72bn. Asian infrastructure assets drove deal activity, accounting for 51% of the total deal value and 27% of global transactions.
In this update covering Q2 2016, Preqin examines fundraising activity in each closed-end alternative asset class through the quarter, and looks at the state of the fundraising market at the beginning of Q3.
Preqin’s latest report on private equity in emerging markets finds that the total assets held by fund managers based in these regions has reached a record $297bn as of September 2015, up from $258bn at the end of 2014.
Preqin’s inaugural report on global deals involving PERE fund managers finds that increases in dry powder have led to increased competition for assets. As a result, fund managers are turning to smaller assets and more complex portfolio transactions in search of attractive investment opportunities.
A survey of 270 fund managers conducted by Preqin in early June finds that 79% of both UK- and Rest of Europe-based managers believe Britain will remain in the EU. However, opinion on whether the impact of a British exit would be positive or negative for the hedge fund industry differs between the UK and the rest of Europe.
The hedge fund industry made overall gains of 0.93% in May, to mark the longest period of positive performance since May 2015. Event driven strategies saw the highest returns, gaining 1.59%, while macro funds were the only leading strategy to suffer losses, returning -0.11% for the month.
Micro venture capital fundraising has seen six consecutive years of growth, from $6.5bn raised in 2009 to $8.5bn secured in 2015. Over the past decade, venture capital funds targeting $100mn or less have represented a majority of venture capital funds closed globally in each year.
Preqin’s latest findings show that the number of institutional investors actively investing in CTAs reached a record 1,067 in 2015, up from 1,017 in 2014. As a consequence, CTAs have seen four quarters of net inflows of capital since the start of 2015, with overall positive asset flows of $38bn.
Preqin data shows that only 4% of aggregate private real estate capital raised so far this year, and 11% in 2015, was committed to first-time fund managers. In contrast, managers that have raised six or more funds account for 63% of all capital raised in 2016 YTD.
Preqin’s latest research into the natural resources private funds industry shows that assets under management reached a record $400bn as of September 2015, the latest figure available, an increase of 8% from the end of 2014.
Preqin finds that fund managers in the private debt industry are now looking outside of the more established credit markets and expanding their reach to Asia. In 2015, 17 funds raised more than $6bn of investor capital, the highest aggregate total since 2012 when Asia-focused private debt fundraising totalled $8bn.
Preqin’s annual report on the ‘$1bn Club’ of the world’s largest hedge fund managers finds that in the past year, the number of eligible firms has risen by 98. Despite this, the total assets controlled by firms in the $1bn Club have decreased from $2.78tn to $2.75tn.
Preqin’s latest report on the infrastructure deals market finds that the proportion of deals larger than $1bn transacted in the US reached record levels in 2015. Twenty-seven percent of all deals announced were larger than $1bn, up from 20% in 2014.
Preqin’s May update on the private equity industry examines the recent record levels of distributions from funds to investors. The industry has seen positive net cash flows to investors every year since 2011, totalling $428bn as of June 2015.
Preqin’s inaugural Real Assets Spotlight shows the robust state of the natural resources debt fundraising market. Since 2010, 54 funds have raised an aggregate $29bn, and there are a further 32 natural resources debt funds currently out raising, targeting a combined $23bn of investor capital.
The latest research from Preqin finds that overall women hold just 21% of roles at private real estate firms. The proportion of female employees varies with seniority and department; 78% of junior investor relations roles are held by women, compared with only 5% of senior positions in investment teams.
The Preqin All-Strategies Hedge Fund benchmark recorded the second consecutive month of positive hedge fund performance in April to bring 2016 YTD figures into the black for the first time this year. Returns of 1.44% through the month follow gains of 2.40% in March to put performance for 2016 so far at 0.70%.
In its latest review, Preqin finds that sovereign wealth funds investing in real estate in 2016 have moved away from higher risk investment strategies, and are increasingly targeting strategies with a lower risk profile. Core real estate is now the most utilized strategy, employed by 72% of sovereign wealth funds, up from 57% in 2015.
Preqin finds that fundraising for Europe-focused direct lending funds surpassed that of North America-focused funds for the first time in 2015. Europe-focused vehicles secured a total of $19bn in investor commitments through the year, while funds targeting North America raised a combined $17bn.
The hedge fund industry saw net outflows of investor capital in Q1 2016, totalling $14.3bn. Overall, the total assets under management held by hedge funds globally fell 0.48% in the quarter, to stand at $3.13tn at the start of Q2.
Preqin is proud to announce that it has been awarded a Queen's Award for Enterprise in the category of International Trade. As the UK's highest official business accolade, the award recognises Preqin as one of 243 UK companies in 2016 that are outstanding in their fields.
The latest Preqin research finds that Asia-Pacific-focused hedge funds recorded losses of 2.02% through Q1 2016, the lowest performance of any region. Moreover, just 5% of new hedge fund launches were focused on the region, down from 17% in Q4 2015.
The 2016 Preqin Sovereign Wealth Fund Review finds that the total assets under management of sovereign wealth funds globally have increased by $200bn over the past year. As of March 2016, these funds hold $6.51tn in assets on behalf of their countries.
Private equity secondaries funds have continued their strong fundraising in Q1 2016, securing a combined $2.6bn. The number of funds in market has continued to grow across the quarter, and is now at a record high, as 36 vehicles seek a total of $28bn in investor commitments.
The Preqin All-Strategies Hedge Fund benchmark posted 2.82% in March, to record the best monthly return for the asset class since January 2012 (+3.06%). All leading hedge fund strategies posted gains, with equity strategies seeing the highest returns of 3.79%.
The latest update from Preqin shows that the first quarter of 2016 saw 874 private equity-backed buyout deals globally, worth a combined $44bn. This represents a sharp decrease from the 962 deals in the previous quarter, which were worth a post-crisis record $137bn.
Preqin’s latest data shows that despite just 10 unlisted infrastructure funds closing in the opening quarter of 2016, those funds raised an aggregate $15bn1. This represents the fourth highest quarterly fundraising total since 2010, despite being the lowest quarterly number of fund closures since Q1 2014.
The latest update from Preqin shows that 2,403 venture capital deals worth a combined $34bn were concluded globally in the first quarter of 2016*. This represents an increase in the number of deals and aggregate deal value compared to Q4 2015, which recorded 2,366 deals globally, worth a total of $27bn.
In this update covering activity in Q1 2016, Preqin reviews the closed-end private capital fundraising market as a whole. We also examine each closed-end alternative asset class individually, looking at fundraising through the quarter and the state of the fundraising market in these asset classes at the beginning of Q2.
The 2016 Preqin Global Private Debt Report finds that the industry continued its robust growth in 2015, with total assets under management reaching $523bn as of June, up from $483bn at the end of 2014.
The 2016 Preqin Global Natural Resources Report finds that performance concerns have had a negative impact on institutional investors’ short term allocation plans. Forty-one percent of natural resources investors plan to allocate less capital to the asset class in 2016, although 28% plan to increase their allocations over the longer term.
The Preqin All-Strategies Hedge Fund benchmark improved on losses of 2.68% in January but still posted negative performance of 0.06% in February. CTAs, meanwhile, continued their robust performance with gains of 2.18% in February to take 2016 YTD returns to 3.15%.
Preqin finds that 65% of surveyed institutional investors in private equity hold a generally positive perception of the industry, and just 6% have a negative view. Strong performance has contributed to this buoyant sentiment, with 94% of investors stating that performance had met or exceeded their expectations in 2015.
Drawing on data compiled for the 2016 Preqin Global Hedge Fund Report, Preqin has created league tables of hedge funds that have most consistently delivered strong, stable performance. These league tables do not seek in any way to endorse these funds, but rather to illustrate those that have performed the most consistently over the period January 2013 – December 2015.
Preqin research finds that the average proportion of female senior employees at private equity firms is increasing across most geographies and strategies. Overall, women currently constitute an average of 12.6% of senior employees at private equity firms, up from 11.7% in 2015.
Preqin surveys of private real estate fund managers and institutional investors show the increasing prevalence of co-investments within the asset class. Almost two-thirds of fund managers currently offer co-investment rights to investors, while another quarter are considering offering them.
The Preqin Investor Outlook: Alternative Assets, H1 2016 finds that investors are mixed in their attitudes to the alternative assets industry. The majority of private equity and real estate investors are positive, but hedge fund and natural resources investors have a more negative perception.
Preqin’s All-Strategies Hedge Fund Benchmark recorded losses of 2.60% in January, its worst monthly performance since May 2012. Despite overall negative returns, hedge funds still offered downside protection against turbulent global markets while CTAs posted their best monthly performance (+1.38%) since January 2015.
A special private debt report by Preqin finds that distressed debt fund managers focused on North America and Europe have record levels of capital available for investment. While fundraising for these regions remained steady, dry powder increased by $9.1bn to reach an all-time high of $55bn by the end of 2015.
Preqin's private equity fund manager outlook for 2016 finds that fund managers believe pricing for investment opportunities and fundraising will be the biggest challenges facing them in 2016.
The 2016 Preqin Global Real Estate Report finds that private closed-end real estate funds have again returned record amounts of capital back to investors; funds distributed $138bn to investors in 2013, $187bn in 2014, and a further $103bn in H1 2015.
Preqin’s 2016 Global Hedge Fund Report finds that 2015 was another challenging year for the industry, during which the Preqin All-Strategies Hedge Fund benchmark recorded gains of 2.02%. Despite this, total industry AUM increased by $178bn to reach $3.2tn as of November 2015.
In its 2016 Global Infrastructure Report, Preqin finds that both fund managers and investors are concerned with sourcing deals at compelling pricing in 2016. The majority of fund managers and 38% of investors cite finding attractive investment opportunities as the key challenge facing them in the year ahead.
Preqin’s 2016 Global Private Equity & Venture Capital Report finds that record distributions are spurring investors to commit more capital in 2016. Private equity funds distributed $189bn in H1 2015, continuing momentum from the record $475bn that was returned to investors in 2014.
Preqin's 2016 Global Alternatives Reports find that alternative assets fund managers hold a record $7.4tn in combined assets under management (AUM) in 2015, up from $6.9tn a year before. Private capital funds hold $4.2tn in combined AUM, while the hedge fund industry now stands at a combined $3.2tn.
December was another difficult month for the hedge fund industry, as the Preqin All-Strategies Hedge Fund benchmark recorded performance of -0.40%. This puts full-year performance for 2015 at 2.02%, the lowest yearly return since 2011, when hedge funds posted -1.77%.
In this update covering activity in 2015, Preqin reviews the closed-end private capital fundraising market as a whole. We also examine each closed-end alternative asset class individually, looking at fundraising through the year and the state of the fundraising market in these asset classes at the beginning of 2016.
2015 saw the aggregate value of venture capital deals increase for the third successive year to stand at $135.8bn, up from $93.5bn in 2014 and more than double the $57.1bn in 2013. While Asia saw a significant uptick, deal numbers in Europe and North America fell.
Private equity-backed buyout deal activity saw continued growth in 2015, as 3,546 deals were recorded totalling $409bn. This represents an 18% increase on the $348bn of private equity-backed deals in 2014, and it is the sixth consecutive year in which global deal value has increased.
2015 has seen a continued decrease in both the number and aggregate value of US venture capital exits. The first three quarters of 2015 saw 414 exits generate an aggregate value of $28.8bn, while the same period in 2014 saw 527 exits with a total value of $62.2bn.
Underwhelming performance in 2015 and high investor dissatisfaction have reduced inflows and demand for CTA funds. Fifty CTAs launched in the first nine months of 2015, and the year looks set for the fewest launches since 2006, when 66 CTA funds launched.
Europe-focused infrastructure funds have continued their strong fundraising in 2015, with 12 funds reaching a final close raising an aggregate €9.4bn in investor commitments. This total follows the €9.6bn raised in 2014, and approaches the €10.5bn raised by funds closed in 2013.
The latest research by Preqin shows that capital raised in 2015 by natural resources funds is on course to match the record $61bn raised by such funds in 2013. Fundraising in 2015 YTD has already surpassed the $52bn raised in all of 2014.
The latest research from Preqin finds that management fees among infrastructure funds of more recent vintages are lower than for previous vintage years. While 2012 and 2013 vintage funds have a median investment period management fee of 2.00%, funds currently in market, or with a 2015 vintage, have a median fee of just 1.50%.
Preqin’s latest survey of fund managers and investors examines the increasing appetite for co-investments among both parties. It finds that 80% of limited partners (LPs) have seen their co-investments outperforming private equity funds, with 46% seeing their co-investments outperform by a margin of over 5%.
Preqin’s latest research shows the challenging fundraising environment faced by private real estate fund managers attempting to raise their first or second offering. Despite strong overall fundraising market for new private funds, emerging managers account for just 16% of real estate capital in 2015, the lowest proportion ever.
Preqin’s 2016 Private Equity Compensation and Employment Review finds that among surveyed firms, 74% of private equity fund managers have made firm-wide increases in base salary from 2014 to 2015. The average increase in salary was 7%, with 14% of firms increasing base salaries by more than 10%.
Preqin’s Q3 private debt report reveals that direct lending funds continue to be the largest part of the private debt market, accounting for $9bn of the $19.3bn raised by private debt funds closed in the quarter. Half of the 10 largest funds closed in Q3 were direct lending funds, and 42% of private debt funds currently in market follow this strategy.
Aggregate deal value in Asia for both venture capital and buyout funds hit record highs in 2014. While buyout activity does not look likely to match that in 2015, venture capital deals have already surpassed 2014’s total of $22.4bn, reaching $31.6bn by the end of August. Over the past two years, average venture capital deal size has increased by 259%, from $5.6mn in 2013 to $20.1mn in 2015 YTD.
Opportunistic funds have continued their robust fundraising activity into the third quarter of 2015, as funds that held a final close in the period raised an aggregate $28.2bn. This represents 75% of the total amount of capital raised by private real estate funds in Q3, and far outstrips the $7.2bn raised by opportunistic funds closed in Q2.
The infrastructure fundraising market rallied in Q3, after declining from the most recent peak of $15.9bn, seen in Q2 2014. The $13.1bn secured by unlisted funds closed in the quarter represents a 51% increase on the $8.7bn raised in Q2, and brings the total aggregate capital raised in 2015 YTD to $27.2bn.
Global private equity fundraising saw a further slowdown through the third quarter of 2015. One hundred and seventy funds closed, down from 317 in Q2 2015 and 290 in the same period last year. The aggregate capital raised by funds closed in this quarter was $116.9bn, down from $129.3bn in the previous quarter. It was the third consecutivequarterly decline in fundraising, and represents a 29% decrease from the $164.9bn raised in Q4 2014, the most recent fundraising peak.
There were 230 trade sale exits in Q3 2015, nearly matching the record 231 exits in Q4 2012. This total is expected to increase further as more information comes to light, surpassing the previous record and making the quarter the busiest ever for private equity-backed trade sale activity. Trade sales have been the key driver of the private equitybacked exit market in Q3 2015, as the number of IPOs, sales to GP, and restructurings all fell.
The venture capital industry in Asia has seen strong growth over the past year, and in Q3 the aggregate value of deals was comparable to the total value of deals in North America. India and China, the largest part of the Asian industry, marked 709 financings in the quarter, worth a combined $16.9bn. There were 932 venture capital deals in North America in the same period, worth an aggregate $17.5bn.
The latest research by Preqin into hedge fund performance finds that as of the end of August, large hedge funds – those with AUM of $1bn or more – posted the greatest returns of any size category. They outperformed emerging, small and medium funds for the month (with -1.49% returns), as well as across the 12-month (+4.30%), 3-year annualized (+9.06%), and 5-year annualized (+8.52%) horizons.
Figures compiled for the forthcoming 2015 Preqin Private Equity Fund Terms Advisor show the significant disparity in fees private equity fund managers offer investors in their separate accounts and co-investment opportunities, with that of commingled fund investments. When calculating performance fees, 48% of fund managers charge a 20% carry rate for separate accounts, compared to 85% of managers running commingled funds. 48% of managers charge no carried interest on co-investments, while only a quarter keep the same rate as in their main vehicle.
Drawing on data compiled for the 2015 Preqin Alternative Assets Performance Monitor, Preqin has created league tables of hedge funds that have most consistently delivered strong, stable performance. The league tables do not seek in any way to endorse these funds, but rather to illustrate those that have performed the most consistently over the period June 2010 – June 2015.
Following Preqin’s mid-year surveys of both hedge fund investors and fund managers, both parties stated that the greatest challenge the industry currently faces is performance. Forty-four percent of investors named performance as a key issue facing the industry, as well as 22% of fund managers, higher than any other factor.
Preqin’s H2 2015 Investor Outlook has found that investors in private real estate funds have a very positive view of the asset class at present. Fifty-seven percent of investors recently surveyed by Preqin felt positively about their real estate portfolio, up from 37% in December 2014.
Drawing on data compiled for the forthcoming 2015 Preqin Alternative Assets Performance Monitor, Preqin has created league tables of alternative asset fund managers that have most consistently outperformed their peers. The league tables do not seek in any way to endorse these fund managers, but rather to illustrate those that have performed the most consistently in the past.
The global hedge fund industry has seen a $76bn net inflow of assets through the first half of 2015, bringing the size of the industry to $3.22tn. The second quarter saw the greater amount of inflows from investors, with $48bn in Q2 compared to $29bn in first quarter.
Research for Preqin’s latest Investor Outlook has found that four out of five institutional investors invest in at least one alternative asset class. Private equity, hedge funds and real estate are the most targeted alternative asset classes, with over half of investors having an allocation to each of them in their portfolios. Although the benefits vary significantly between asset classes, common reasons cited by investors for holding allocations to alternative assets include diversification, high returns, reliable income streams and inflation hedging characteristics.
The latest Preqin research into infrastructure investment has found that the average deal size has risen 56% between 2013 and 2015 YTD. Transactions completed in 2013 had an average size of $401mn, compared to $626mn for deals done so far in 2015.
Private debt fund managers are currently sitting on a record $185bn in dry powder, capital commitments from investors that are yet to be invested. Fund managers are keen to invest this capital in attractive investment opportunities, as 66% of respondents to a recent Preqin survey of over 100 private debt fund managers indicated they plan to deploy more capital over the next 12 months. Yet managers face intense competition from their peers – over half of survey respondents (51%) noted that they felt competition for investments had increased over the past 12 months, and a third claimed it was harder to find attractive opportunities in the current market.
The latest research from Preqin indicates that an estimated 1,180 zombie funds are being held in institutional investors’ portfolios. This is an increase from the 1,049 estimated by Preqin as of a year ago, and a further increase from the 999 in existence as of July 2013. The value of unrealized assets being held by zombie funds has also risen, from $80.9bn in 2013 to $126.6bn in 2015.
To aid the private equity industry in benchmarking performance, Preqin has launched a new Public Market Equivalent (PME) tool which offers benchmark and fund-level comparison against six public market indexes. These tools overcome the benchmarking difficulties by accounting for the timings of fund cash flows in a public market index, and can be used to analyze and compare private equity performance with public markets on a more meaningful, like-for-like basis.
Preqin’s latest survey of global hedge fund managers reveals that most UK- and Europe-based hedge fund managers are AIFMD-compliant. By contrast, there has been slow uptake among firms beyond the EU’s borders; a quarter of hedge fund managers based across Asia and Rest of World currently comply, and only 15% of firms based in the US.
The hedge fund industry has posted average returns of -0.75% for June, the first month this year of negative performance. Despite this, the benchmark has still returned 4.50% year-to-date. Single-manager hedge funds were not the only fund structures which fared poorly in June; UCITS posted returns of -1.76%, and CTAs made losses of -2.66%, their worst monthly performance since July 2008.
Fundraising in the private debt market has slowed over recent quarters. Twenty-five funds closed in Q2, raising a total of $16.5bn in capital, compared with 26 funds that raised $20.8bn in Q1 2015. This is a further drop from the $23.0bn raised in Q4 2014, and marks the lowest Q2 figure since 2012, when 23 funds raised $8.4bn.
Preqin, the alternative assets industry’s leading source of data and intelligence, is delighted to announce the appointment of Edmond Ho as Chief Revenue Officer. Edmond also joins Preqin's Management Team and will commence his role on 27th July 2015.
Firms managing closed-end private real estate funds have a record $254bn in dry powder available, up 37% from the $185bn in December 2014, and representing the highest amount on record. The increase in uncalled capital available to private real estate fund managers is a result of strong fundraising over the last two years. In Q2 2015, 47 real estate funds closed securing an aggregate $26bn, bringing the 2015 total so far to $60bn. This represents the second highest half year figures for private real estate fundraising since the financial crisis, after H2 2013 when $64bn was raised.
Six unlisted infrastructure funds closed in Q2 2015, raising a combined $4.4bn, a notable decline on the $5.4bn raised in Q1, and the fourth consecutive quarter in which the total capital raised has fallen. Just $9.8bn was raised in the first half of 2015, compared with $24.2bn in the first half of 2014.
The global private equity fundraising environment continued to be slow during the second quarter of 2015, with the lowest amount of capital raised since Q1 2013. A total of 220 funds raised an aggregate $104.7bn globally, down from the 237 funds that closed over the first quarter that raised $128.7bn. Within the North American market specifically, however, fundraising for venture capital funds exceeded that for buyout funds, which has only happened once before in Q1 2012.
The venture capital industry has had a very strong start to 2015. Not only is the fundraising market buoyant, but venture capital fund managers have invested a record $63.0bn over the first six months of the year. This is 48% more than the amount of capital invested through the first half of 2014, and 145% more than the amount of capital invested in Q1 and Q2 2013.
The second quarter of 2015 witnessed 10 large cap buyout deals ($1bn or more in value) across Europe, the highest number since Q2 2008 when 11 took place. This resulted in an increase in aggregate deal value for the region from $20.4bn in the first quarter to $32.4bn in Q2 2015. Globally, there was a total of 755 private equity-backed buyout deals over the quarter, valued at an aggregate $96bn.
Separate account mandates have seen a rise in prominence within the private equity real estate industry over recent years. Preqin tracked 45 separate accounts that were awarded to fund managers in 2014, raising a record $17.8bn in capital. This is up from the $16.1bn awarded to 48 real estate separate accounts throughout 2013. As a proportion of all closed-end real estate fundraising in 2014, separate accounts made up 21% of the total number of real estate funds raised throughout the year, and 18% of the total capital raised – the highest proportion of annual fundraising in any year.
The worldwide “Club” of the largest investors in hedge funds has seen a net migration of 24 investors into the Club over the past 12 months. A total of 51 investors have increased their allocation to the asset class to over $1bn, while 27 investors have seen their allocation fall below the $1bn mark. There are now a total of 227 investors around the globe that have $1bn or more in assets invested in hedge funds, and collectively these investors have $735bn invested in the asset class.
The hedge fund industry has now reached $3.16tn in assets as of the end of Q1 2015, but a growing proportion of these assets are concentrated among a small pool of large managers. The “$1bn Club”, which now includes 570 managers, represents 11% of the total 5,122 single-manager hedge fund managers across the globe. But these firms command a total of $2.78tn of industry capital, which amounts to 92% of the total assets in hedge funds.
The average time that private equity firms have been holding buyout investments in their portfolio has been rising year-on-year since 2008. This reached a record high of 5.9 years for companies exited in 2014, almost two years longer on average than companies sold in 2008. Yet for investments realized so far in 2015, the average holding period has dropped to 5.5 years. This marks the first point that the average holding period for buyout deals has seen a drop since the financial crisis, and is coupled with a strong exit environment which has seen a record number and total value of private equity-backed exits in 2014.
Research conducted for the 2015 Preqin Sovereign Wealth Fund Review found that 45% of sovereign wealth funds active in real estate currently invest less than 5% of their total assets in the asset class. However, all sovereign wealth funds globally have a target allocation of 5% or more to real estate, and 43% have a target allocation to the asset class of 10% or more of their total assets. This suggests that there is potential for significant inflows into real estate as these sovereign wealth funds invest to move towards their strategic targets, particularly as these investors seek ever more globally diversified portfolios.
Preqin’s latest analysis of the risk/return profile of major private equity and private debt fund strategies has shown that direct lending funds have been providing investors with superior returns given their level of risk. These funds, which have increased in prominence since the fallout of the global financial crisis and the reduction in bank lending, are returning 11.4% on average annually. This is only surpassed by distressed debt funds over the same period (vintage 2002-2012), which are returning 12.6%.
The majority of sovereign wealth funds globally have increased their assets under management over the course of 2014. This is despite falling commodity and oil prices, which many of these institutions rely on for funding. The growth in assets, up from $5.38tn in October 2013 to $6.31tn in March 2015, has been driven by continued funding from governments and reserves, as well as from investment returns.
The pace of private equity fundraising slowed in Q1 2015, following a strong end to 2014. The quarter saw the lowest number of funds close in any quarter for over 10 years, although this figure may increase by 10-20% as more information becomes available. This compares to an average of 288 fund closes in each quarter in 2014.
The opening quarter of 2015 has seen the highest quarterly value of private equity-backed buyout deals since Q3 2007, led by the merger between Kraft Foods Group and H.J. Heinz Company. The total value of buyout deals in Q1 2015 reached $97bn, the highest amount since $125bn worth of deals in the third quarter of 2007.
Q1 2015 saw another strong quarter for private equity real estate fundraising, with $29bn raised. More than three-quarters of the capital raised in the quarter was by just three firms however, with Blackstone Group’s record-breaking $14.5bn fundraise contributing half of the total capital alone.
The venture capital industry has delivered another quarter of strong deal making. The amount of capital invested in young companies is up over 50% on the amount of capital invested in the first quarter of 2014, and has even surpassed deal making in Q4 2014, which was the highest on record.
The global private debt market, also referred to as the alternative or non-bank lending industry, is fast approaching $500bn in assets under management. The industry has seen steady growth over recent years, with one of the most significant gains made through 2013, when AUM leapt up 16% in the space of a year. A lot of this growth has stemmed from the development of alternative lending across Europe, a market that has traditionally been dwarfed by the North American private debt industry.
The proportion of institutional investors active in infrastructure looking to make unlisted fund commitments has been steadily falling in recent years. As of the start of 2015, 65% of infrastructure investors tracked by Preqin were searching for new fund investments over the course of the year. Only two years ago, however, 91% of investors were looking to make new fund commitments. Conversely, the proportion looking to make direct investments in assets has grown from 29% of investors as of the start of 2013 to 56% as of the start of 2015.
Hedge fund managers have got off to a strong start in 2015. Following a year which saw the average hedge fund deliver returns of 3.78%, managers have already returned 2.52% on average two months into the year. Given that performance was named as the key concern in the industry in 2015 by investors in a Preqin survey at the end of 2014, managers will have been keen to deliver strong performance early in the year.
Preqin’s latest research into gender equality at single-manager hedge funds reveals the Asia-Pacific region is leading the way. The region employs women in 11.2% of C-level roles, but is closely followed by North America which employs 10.9%. Europe-based managers have the worst representation of women in senior roles, with only 6.6% held by females.
2015 is set to reach an all-time high in terms of private equity secondaries transaction volume, following an estimated $42bn worth of purchases in 2014. Two-thirds of secondaries fund managers recently surveyed by Preqin intend to invest more capital over the course of 2015 than last year. Following a record year for fundraising for private equity secondaries vehicles, managers have a wealth of capital available to spend in the market.
Venture capital firms have made a notable improvement in the hiring of women in senior positions. Almost 15% of senior positions at these firms are held by women, compared to 14.0% at infrastructure firms, 13.6% at real estate firms and only 10.5% at buyout firms. A year ago, venture capital firms ranked behind infrastructure and real estate firms, but ahead of buyout firms, and have seen the greatest improvement over the past year. Despite these positive steps, only 11.7% of leadership roles are held by women in the private equity industry as a whole.
The majority of institutional investors that were interviewed by Preqin at the end of 2014 believe that more needs to be done with regards to the management fees they pay on alternative assets fund investments. Of the five major alternative asset classes – private equity, hedge funds, real estate, infrastructure and private debt – investors named management fees as the area that needed the most improvement with regards to alignment of interests in all asset classes but private debt. Within private debt, it was second behind the amount managers commit to their own funds.
The private real estate industry has seen improving fortunes in recent years. The industry now manages an all-time high of $742bn in assets and generated annualized returns of 16.7% over the last three years. But this has created an environment of stiff competition. Pricing for prime assets is a concern for many in the industry, and 75% of fund managers feel there is more competition for core real estate assets than a year ago. Furthermore, 72% of firms said they have seen an increase in competition for investor capital compared to 12 months ago.
2014 was the strongest year of private equity investments since the global financial crisis, yet the majority of private equity fund managers are looking to invest more this year. Preqin spoke to 260 firms* worldwide in November last year, and 55% claimed they would be investing a higher amount of capital in 2015 compared to last year. A further 35% of managers suggested they would be investing a similar amount as last year.
Preqin today launches our 2015 Global Alternatives Reports, which reveal significant growth in assets held by private equity, hedge fund, private debt, real estate and infrastructure fund managers. Total industry assets now stand at $6.91tn, up from $6.22tn as of this point last year.
Data from Preqin’s forthcoming 2015 Global Hedge Fund Report shows that industry performance ultimately disappointed in 2014. The Preqin All-Strategies Hedge Fund benchmark gained just 3.78% in 2014, the lowest annual return since the 1.85% loss seen in 2011. Furthermore, most hedge funds failed to match the returns made in the previous year, and solid advances were frequently followed by losses as managers struggled to gain momentum.
Preqin and Baxon Solutions have formed a strategic partnership, effective from today. This partnership includes Preqin taking a significant minority stake in Baxon. It will accelerate Baxon’s development and delivery of a comprehensive portfolio management and valuations platform for the private equity industry. The principal aim of the partnership is to combine the alternative assets expertise of both firms to address the rapidly increasing market demand from both GPs and LPs for transparent, accurate and actionable data on their funds and portfolio investments.
Closed-end private real estate funds that focus on debt investments have had a successful fundraising year, raising the largest annual amount of capital ever. A total of 26 debt funds raised a combined $20bn, up from 29 funds raising $16bn in 2013. Aggregate capital raised across all real estate strategies worldwide reached $90bn, just below the $92bn raised in 2013, but is expected to increase by 10-20% as more information becomes available. However, the total number of funds that reached a final close has seen a notable drop-off, with 177 holding a final close in 2014 compared to 239 in 2013, as capital becomes ever more concentrated among a handful of the larger players.
The infrastructure fundraising market in 2014 saw a slight drop in total capital raised, from $44bn in 2013 to $38bn in 2014. Yet the number of funds reaching a final close has seen a significant drop-off; 2013 saw 69 funds reach a final close compared to 42 funds in 2014. As such, the average fund size has reached levels not seen since 2007, with the average fund closed in 2014 topping $1bn. Furthermore, Preqin’s latest research shows that 54% of infrastructure funds that reached a final close in 2014 exceeded their fundraising target. This is up from 37% of funds that closed above target in 2013, and is the highest proportion since 2008. A further 6% of funds closed in 2014 met their fundraising target.
Over the past year, a total of 7,474 venture capital financings were announced globally with an aggregate value of $86.6bn. This represents an 11% fall in the number of financings taking place compared to 2013, but a 58% rise in the aggregate value of deals compared to the previous year. Companies located in Asia and other regions outside North America and Europe have been the primary benefactors of this increase in financing, with the amount of capital invested across these regions up 160% in 2014 compared to deals done in 2013.
2014 represented the highest ever aggregate exit value for private equity buyout fund managers, with a total of 1,604 exits globally valued at $428bn. This is up over 30% on the total value of exits in 2013, and is the highest ever annual value of private equity-backed buyout exits. This has resulted in a significant increase in the level of capital being returned to buyout fund investors, which had almost surpassed the full-year 2013 amount as of June 2014 (the latest data available). The total value of deals in 2014 reached $332bn globally, the highest annual amount since 2007.
The private equity fundraising market in 2014 has seen a total of $486bn in capital commitments spread between the lowest number of funds in any year since 2009. The amount of capital raised is on track to match the amount of capital raised in 2013 ($531bn), as Preqin expects the 2014 fundraising figure to increase by 10-20% as more information becomes available. For the funds that did close, however, the average time to reach a final close has fallen by two months; funds that closed in 2014 took an average of 16 months, compared to 18 months on the road for funds closed in 2013. Given that the fundraising market is still so competitive, with a record 2,252 funds on the road seeking capital, it is likely that managers may continue to struggle to hold a final close in the coming year.
Preqin’s latest research shows the private equity real estate industry continued to grow in 2014. The aggregate assets under management of closed-end private real estate funds stands at $742bn as of June 2014, an increase of $50bn since December 2013. Total assets under management have increased by 63% since December 2010, with a large proportion of this growth accounted for by the increase in the value of real estate assets still being held by fund managers. The value of the assets held by managers has risen from $314bn in 2010 to $567bn in 2014.
For over a decade since the dot-com crash, the venture capital industry has experienced largely lacklustre returns which have led to tough fundraising conditions for all but a select group of top-tier managers. More recently, however, there have been encouraging signs across the industry, with returns significantly improving and fundraising picking up, particularly as market conditions become more favourable.
Direct lending funds have continued to gain traction in the private debt marketplace, and are the prevailing strategy for private debt fund managers established since 2008. Almost three-quarters of institutional investors active in the private debt space plan to allocate fresh capital in the coming year to direct lending funds, which are often considered a better fit for more conservative investors in the private debt market, given their similar structure to fixed income investments compared to more private equity-style methods such as mezzanine and distressed debt funds.
In recent years there has been a clear upward trend in fund managers successfully attracting more capital for West Coast-focused vehicles, with the aggregate capital raised by these funds increasing year on year from $0.8bn raised by 11 funds closed in 2011 to $2.7bn raised by 18 funds closed in 2013. 2014 so far has seen 11 West Coast-focused private real estate funds reach a final close, having raised an aggregate $1.6bn in capital commitments.
2014 has witnessed the largest amount of capital raised by Europe-focused funds since 2007, demonstrating an overwhelming growth in appetite for European real estate, and opportunistic or distressed opportunities in particular. Over €21bn has been raised so far this year for Europe-focused real estate funds, more than in any other year except 2007, when €23bn was raised. As a result of the significant growth in European fundraising over the past 12 months, dry powder for Europe-focused funds currently stands at an all-time high of €52bn – a 44% increase on December 2013.
Since the fallout of the financial crisis in 2008, the need for alternative providers of credit to companies – both public and private – has increased drastically given the restrictions on lending imposed on more traditional sources of debt financing. This huge growth of the private debt sector and subsequent demand for quality data and information has led Preqin to launch a new product, Private Debt Online, detailing fund managers, fundraising, investors and more active in the alternative lending space.
In Q3 2014, 185 private equity funds held a final close and secured an aggregate $73bn, a figure which is expected to increase by 10-20% as more information becomes available. This is the lowest quarterly amount of capital raised in 3 years, when $66bn was secured by funds closed in Q3 2011. Despite this, fundraising for the whole of 2014 is still likely to be strong following $111bn raised by funds closed in Q1 and $143bn in Q2.
August saw the largest private equity-backed buyout investment as well as the largest exit occur across the whole of 2014 to date. The add-on deal by 3G Capital, combining their current investment in Burger King with that of Canadabased Tim Hortons Inc. for $11.5bn, is the largest private equity deal in 2014. In addition to this, the trade sale of Alliance Boots GmbH by a consortium of private equity fund managers for $15bn registered as the largest private equity-backed buyout exit so far this year.
Preqin’s latest analysis of global venture capital investment activity shows that a total of $59bn has been invested in 5,272 deals globally in 2014 so far, compared to $37bn invested in 5,940 deals over the same period in 2013. While activity for the third quarter is below that of Q2 2014, the amount of capital invested is 45% higher than during the same quarter in 2013.
Closed-end private real estate funds have a record $220bn in dry powder available to invest, up from $186bn in December 2013, representing the highest amount on record. The majority of capital is accounted for by North America-focused funds, with $113bn of dry powder focused on the region. Europe-focused funds have $66bn of dry powder, with Asia-focused funds and funds focusing outside of these three regions having $32bn and $9bn in uncalled capital respectively.
Preqin’s latest research shows that infrastructure funds that have reached a final close so far this year have raised $1bn in capital on average, representing the highest average fund size seen since 2007, when funds raised an average of $1.1bn.
Preqin has taken a look at how the hedge fund industry has changed in the six years since the global financial crisis. The most significant development is the volume of funds that have launched since the crisis, even in the face of increasing regulation and industry criticism.
Preqin’s latest research into the Asian private equity industry has highlighted the accelerated growth in venture capital investment throughout the region in recent years. After a number of years of slower fundraising and investment activity across the continent, venture capital deal flow across Asia, particularly in more emerging economies such as those in Northeast and South Asia, has increased significantly. The level of investment in buyout opportunities across Asia has also grown in 2014, with $29.6bn of investment so far in 2014 compared to $25.7bn in the whole of last year.
Following the decision by the California Public Employees’ Retirement System (CalPERS) to withdraw from their exposure to hedge funds, Preqin looks at the wider trends of US state pension plans’ exposure and activity in the hedge fund asset class.
According to Preqin’s latest performance benchmarks, CTA hedge funds have had their strongest monthly performance in over three years, posting returns not seen since April 2011. This performance has taken the benchmark to its highest August year-to-date figure since August 2010, a year in which the benchmark ended up posting 15% returns. CTA funds have had a difficult few years, struggling to generate annual returns in excess of 2% since the start of 2011. This monthly return in August, however, marks the fifth consecutive month in the black for the CTA benchmark.
Drawing on data from Preqin’s forthcoming 2014 Private Equity Fund Terms Advisor, it is apparent that private equity fund managers are not doing enough to appease their institutional backers with regards to the fees they charge. Management fees, traditionally charged at 2% of capital committed to a fund each year, are mostly used to cover the operating costs of a fund manager. Investors, however, have been calling for these fees to be reduced, and a greater emphasis placed on performance-related fees, in an effort to improve the alignment of interests between fund managers and investors. Management fees have consistently been named by investors as the area in which alignment of interests can be most improved in Preqin’s historical investor surveys.
Using data compiled for the 2014 Private Equity Performance Monitor, Preqin has constructed a league table of private equity real estate managers that have most consistently outperformed their peers. The league table does not seek in any way to endorse these fund managers, but rather to illustrate those that have performed the most consistently in the past. Thirteen of the 26 fund managers to feature in this year’s list are new entries, and only two of the 20 largest private equity real estate firms globally are listed among the most consistent performing managers.
Preqin’s latest survey of more than 100 hedge fund managers, conducted in June 2014, reveals that 73% of respondents indicated competition in fundraising had increased in the past 12 months. However, 64% of fund managers that run pooled products noted that their assets in these products had increased in the first half of the year. Similarly, 61% and 50% of firms that manage alternative UCITS and alternative mutual fund products respectively reported net inflows to these vehicles.
Preqin’s latest analysis of investment activity within the global infrastructure space has shown that prices for assets traded so far this year are at the highest level on record. More than one-third of transactions completed in 2014 YTD were valued at more than $500mn, with the average investment valued at $523mn. While the average size of deals taking place has risen significantly, the number of investments being completed has fallen in recent years.
Preqin’s latest survey of institutional investors globally that are active in alternative assets indicates that these institutions are growing increasingly proactive with their alternative asset portfolios. Almost a third (30%) of investors have grown their investment teams sourcing private equity, hedge fund, real estate and infrastructure opportunities over the past two years, and a similar proportion expect them to grow over the next two years.
Capital distributions to private real estate fund investors reached an all-time high in 2013, with a total of $138bn returned to investors as a result of managers selling assets. This is more than double the $67bn distributed to investors throughout 2012.
Preqin’s latest research has shown that institutional investors are enjoying good returns from their private equity portfolios with capital distributions in 2013 reaching $568bn. Strong public equity markets, good credit conditions and general positive exit activity have provided the opportunity for private equity fund managers to return the greatest ever amount of capital back to their investors last year.
Preqin, the alternative asset industry’s leading source of data and intelligence, is delighted to announce the appointment of David Brierwood as a Non-Executive Director. He joined the Board with effect from 12 August 2014.
Preqin interviewed 150 fund managers and 100 institutional investors in June 2014 to ascertain their outlook on the hedge fund industry as we entered the second half of the year. When asked to predict the end of year benchmark value in 2014, 99% of hedge fund managers predicted the All Hedge Funds benchmark would be 11% or less, below the 11.69% hedge funds returned in 2013.
Drawing on data compiled for the forthcoming 2014 Preqin Private Equity Performance Monitor, Preqin has created league tables of private equity managers that have most consistently outperformed their peers. The league tables do not seek in any way to endorse these fund managers, but rather to illustrate those that have performed the most consistently in the past. All three fund strategies that have been presented – buyout, venture capital and funds of funds – have seen new entries achieve the highest possible score this year compared to similar league tables created in 2013.
Only a small proportion of fund managers active in infrastructure and real estate think that AIFMD regulations will have a positive impact on their firm and industry, following a recent survey of over 140 managers active in the asset classes. Nevertheless, almost half (49%) of infrastructure managers and 34% of real estate managers worldwide indicated to Preqin in June 2014 that they would be compliant by the AIFMD’s July 2014 deadline.
New research from Preqin, based on a survey of 40 private equity investment consultants, shows that when naming traits a fund manager needs to possess in order to meet its fundraising target – and therefore whether it is worth expending time and resources on – investment consultants prioritize performance track record at a team level. However, when looking for warning signs that a manager will not fundraise successfully, a firm’s performance track record, rather than a team’s, is their highest priority.
As the 22 July 2014 authorization deadline for the AIFMD approaches, new research from Preqin, based on a survey of 150 hedge fund managers, reveals that three times as many hedge fund managers (59% of managers surveyed) think that the AIFMD will have a negative impact on the industry compared to those that think it will have a positive impact (20% of managers surveyed). This is an increase compared to the 53% of managers which thought the AIFMD would have a negative effect on the hedge fund industry in December 2013 and the 29% that stated the same in December 2012.
Improved performance in May and June has provided a more positive outlook for the hedge fund industry following the worst start to a year since 2008. Second quarter performance was almost twice as strong on average compared to Q1 2014, taking year-to-date (YTD) returns to 3.86%. The hedge fund benchmark is behind the 4.28% YTD returns as of the end of Q2 2013, and investors may be expressing concerns that three of the six months in 2014 so far have seen negative average returns.
Preqin, the alternative assets industry’s leading provider of research and data, has announced that as of today its hedge fund data will be available on AlternativeSoft, the award-winning manager selection and portfolio construction platform.
Preqin's latest research shows that the capital raised by closed-end private real estate funds in H1 2014 was higher than that raised in H1 2013. However, the number of funds closed in H1 2014 fell by 30% compared to H1 2013, evidence that the capital raised by closed-end private real estate funds is increasingly concentrated among fewer managers.
Preqin’s latest research shows that there are a record 149 infrastructure funds in market as of the start of Q3 2014, targeting an aggregate $90bn. However, the number of funds holding final closes has declined in 2014 so far compared to last year; just 10 infrastructure funds have closed in 2014 to date, only 42% of the number of funds closed in H1 2013.
The value of private equity-backed buyout exits in the second quarter of 2014 saw a notable jump up from Q1 2014, with 392 exits valued at $138bn in Q2 2014 compared to 331 exits valued at $90bn in the first quarter. This is the highest quarterly exit value for any quarter in the period since the financial crisis, and the second highest number of exits in the same period, behind Q4 2013 which registered 405 exits.
A total of 187 private equity funds held a final close in Q2 2014 securing aggregate capital commitments of $127bn, a figure which is expected to increase by 10-20% as more information becomes available. Aggregate capital secured by private equity funds was higher compared to the $104bn secured by funds closed in Q1 2014 and has remained above the $100bn mark for the fourth consecutive quarter, although the quarterly number of funds closed continues to slide.
Preqin’s latest analysis of global venture capital investment activity has shown that the average value of Series D and later stage deals that occurred in H1 2014 was $64.1mn, a significant increase on the average size of late stage deals done in 2013, which stood at $34.4mn.
New research from Preqin shows that 75% of private real estate firms say competition for assets is even greater than last year. Closed-end private real estate funds have an all-time high of $206bn of equity available to invest in real estate opportunities, and 63% of private real estate firms plan to deploy more capital in real estate assets in the next 12 months compared to the past 12 months, but they face increased competition when looking to put this capital to work.
New research from Preqin shows that although discretionary funds tend to outperform systematic funds when markets are rising, systematic funds can provide benefits in terms of lower volatility and higher risk-adjusted returns. As such, systematic funds are generally perceived as providing good downside protection to investors in down markets. Given that a recent Preqin survey of investors highlighted that the majority invest in hedge funds for uncorrelated returns, risk-adjusted returns or reduced portfolio volatility, rather than high absolute returns, systematic funds can be an attractive prospect to certain investors.
New research from Preqin shows that the majority of hedge fund investors are not looking for double digit returns from their hedge fund investments; instead, Preqin’s survey of over 100 institutional investors shows they are looking for their hedge fund portfolios to produce returns uncorrelated to equity markets (59% of investors named this), produce robust risk-adjusted returns (53% of investors) and dampen portfolio volatility (46% of investors). Sixty-seven percent of hedge fund investors look for returns between 4% and 6%; only 6% of investors seek returns over 10%.
Recent research from Preqin reveals that 8 private equity secondaries funds have closed in 2014 so far (as of 3 June), raising an aggregate $13bn in investor commitments. This is more than triple the $4.2bn raised by 6 secondaries funds closed in the same time period in 2013. The average size of secondaries funds closed in 2014 so far is $1.6bn, more than double the average size of $729mn of funds closed in 2013.
Recent research from Preqin reveals that activism is becoming a more widely utilized approach in the hedge fund industry, with 2013 seeing the highest number of activist hedge fund launches since 2007, at 28 funds. In terms of performance, activist funds returned an average of 11.82% in 2013, ahead of the overall hedge fund benchmark which returned 7.88%.
The latest edition of Preqin’s Real Estate Spotlight reveals that the 20 private real estate managers that have raised the most capital in the last five years account for a considerable proportion of global private real estate spending power. These firms hold $69bn of available dry powder, the capital that has been committed to funds by investors but is yet to be spent, out of the total $215bn available to the global closed-end private equity real estate industry.
The “$1bn Club” of the largest hedge fund managers represents just under 11% of the 4,621 active managers worldwide. New York is the undoubted home of this “$1bn Club”, with 174 of these firms headquartered there representing a total of $938bn in AUM. The May 2014 edition of Preqin’s Hedge Fund Spotlight also shows the importance of investors allocating at least $1bn to hedge funds. There are currently 203 institutional investors in this “$1bn Club”, an increase of 46 from a similar study in May 2013, and these firms represent approximately $650bn in terms of combined capital allocated to hedge funds.
Infrastructure deals in 2013 were, on average, financed by the highest level of debt ever recorded, new research from Preqin shows. While the level of deal activity for infrastructure assets has remained fairly steady over recent years, the amount of debt financing for these deals has been increasing, with estimated aggregate leverage in 2013 amounting to a record $256bn compared to $220bn in 2012.
Preqin’s latest edition of Private Equity Spotlight reveals that women account for 22% of senior private equity investment professionals at institutional investors, a notably higher proportion than at private equity firms, where women account for just 11% of senior roles. Despite women accounting for a greater proportion of senior private equity professionals at institutional investors than at private equity firms, women are still underrepresented in the industry.
Preqin’s latest Real Estate Spotlight reveals that the number of private real estate debt funds in market has increased year on year since 2010, with 53 debt funds currently on the road targeting aggregate capital commitments of $22bn, compared to 26 funds targeting a total of $10bn in May 2010. The majority of capital currently targeted (60%) is for European debt investments, with many fund managers looking to capitalize on the vast availability of debt opportunities in the region.
Data from Preqin’s Hedge Fund Analyst shows that the majority of European hedge fund managers that have set up business over recent years have been in the UK. The UK is also the most prominent country in terms of hedge funds being launched in Europe, representing approximately 50% of all known European hedge fund launches in 2013 and 2014 YTD.
Institutional investors are becoming an integral source of direct investment for infrastructure projects. Preqin’s latest research estimates that these institutions have invested directly in infrastructure deals valued at a total of $237bn over the course of 2012 and 2013, compared to an estimated $202bn over the two years prior. Since 2007, the value of transactions involving direct investment by institutional investors has accounted for approximately 34% of the total value of capital invested in infrastructure assets. Furthermore, these institutions have been active direct investors in almost a quarter (22%) of all infrastructure transactions over the same period.
New research from Preqin demonstrates that despite a greater concentration of capital being raised among larger private real estate funds in recent years, smaller funds have often outperformed larger funds. Funds of $1bn or more in size raised 56% of the total capital raised in 2013, compared to 29% of capital the year before, despite the relative outperformance of smaller funds in recent years. The heightened risk that often accompanies an investment in these vehicles, however, is likely to account for the low levels of current investment in smaller managers.
Data from Preqin’s Hedge Fund Analyst reveals that hedge funds have suffered their worst first quarter in terms of performance since 2008, with the Preqin All Hedge Fund Strategies benchmark up 1.23% year-to-date (YTD). This is in contrast to both 2012 and 2013 when hedge funds achieved their highest returns in Q1, with quarterly returns of 6.07% and 3.76% respectively.
New research from Preqin reveals that 25 first-time funds achieved a final close in Q1 2014, securing an aggregate $5bn, the lowest quarterly amount in the period since 2008. This figure equates to just 5% of total capital raised by all private equity funds closed in Q1 2014, compared to 7% for funds closed in 2013 and 13% for funds closed in 2008. This is worrying news for the 641 first-time managers actively seeking to raise their first funds, targeting a combined $141bn.
Preqin’s recent survey of more than 150 private equity and hedge fund managers reveals that these firms have been slow to take advantage of the marketing opportunities presented by the JOBS Act, which allows them to advertise and perform general solicitations to showcase their funds to a larger number of potential investors. Only 4% of hedge fund managers and 5% of private equity managers surveyed said they have registered to market under the JOBS Act.
New research from Preqin shows that investors in private real estate are increasingly moving up the risk/return spectrum, with a significant 59% of the real estate investors that are searching for new funds in the year ahead planning to target opportunistic funds, compared to 47% in the 12 months following Q1 2013. There has been a corresponding decline in interest in the lower-risk core strategy, with only 35% of investors searching for new funds in the next 12 months expecting to invest in core funds, down from 56% of investors in Q1 2013.
The latest quarterly research from Preqin shows that although only five unlisted infrastructure funds closed in Q1 2014, the aggregate capital raised represents a solid quarter, with the total capital secured exceeding the amount raised in Q2 or Q3 2013, but falling short of the $20.4bn raised by the 22 funds which closed in Q4 2013. Capital raised over the last 12 months by unlisted infrastructure funds amounts to a total of $39bn, similar to the aggregate $37bn raised in the previous 12 months.
In Q1 2014, there were 1,402 venture capital financings globally with an aggregate value of $15.6bn, representing the highest quarterly value since the financial crisis in 2008. This surpasses the previous high of $14.9bn in Q2 2011 and is a significant increase from $10.0bn for the first quarter of 2013.
New research from Preqin shows that closed-end private real estate fund managers have $110bn of equity available to make new investments in North America as of March 2014, an all-time high and an increase on the $106bn in dry powder available as of December 2013 and $89bn as of December 2012.
New research from Preqin reveals that Q1 2014 was the most successful quarter ever in terms of Europe-focused closed-end private real estate fundraising, with €8.8bn raised by nine funds that held a final close, compared with €8.2bn in Q2 2007 and €7.5bn in Q2 2008; in the most recent quarter, Q4 2013, only €3.4bn was raised by seven private real estate funds that closed in the quarter targeting Europe. A significant proportion of the Q1 2014 total was raised by Blackstone Group’s Blackstone Real Estate Partners Europe IV, which held a final close on €5.1bn in March and is the largest Europe-focused closed-end private real estate fund of all time.
The global private equity fundraising industry has had the strongest start to a year since the global financial crisis of 2008. A total of 174 private equity funds reached a final close during Q1 2014 raising an aggregate $95bn in capital, the largest amount of capital raised since $173bn was raised by the 308 private equity funds that closed in Q1 2008.
An increased level of global private equity-backed buyout investment over the previous two quarters has been primarily brought about by strong investment activity in North America. A total of 672 private equity-backed buyout investments were made globally in Q1 2014 totalling $79bn in value, compared to 769 investments valued at $61bn in Q4 2013.
New research from Preqin’s Hedge Fund Analyst reveals that mid-sized hedge funds were the best performers in 2013 compared to other fund sizes. Mid-sized hedge funds with assets under management (AUM) of $100-499mn and $500-999mn posted 12-month average returns over 2013 of 13.79% and 13.71% respectively, beating large funds (AUM of $1-5bn) and small funds (AUM of less than $100mn), which posted 12.08% and 11.45% respectively.
Preqin’s global survey of over 100 hedge fund managers in December 2013 showed that managers have frequently changed the service providers working on their funds, with almost half of respondents indicating they had switched service provider at least once since their fund’s inception. Fund administrators and prime brokers are the most frequently switched provider, and most commonly, dissatisfaction with the quality of service provided was the reason given by fund managers for changing their service provider.
Using data taken from Preqin’s Hedge Fund Analyst, hedge funds added gains of 1.72% in February which takes the industry benchmark to 1.42% for the year to date. Despite gains of over 2% for some hedge fund strategies, hedge funds lagged wider equity markets and indices, such as the S&P 500 which was up over 4% in February 2014.
Preqin’s recent surveys with 140 private equity investors and 80 private equity fund managers worldwide reveal that private equity co-investments are becoming increasingly significant. 52% of investors plan to increase their coinvestment activity in 2014, while 31% of fund managers expect to offer more co-investment opportunities in the year ahead.
New research from Preqin demonstrates that despite an uncertain economic outlook for many Asian economies, appetite for Asian private real estate has grown among investors based in North America and Europe, as well as Asia. North America- and Asia-based real estate investors have shown the most significant increase in appetite for Asian investments, with 17% of investors based in North America focusing on Asian investments in February 2014, compared to only 9% in July 2013; similarly 71% of Asia-based investors are targeting the region in the year ahead as of February 2014, compared to 57% in July 2013.
Over the course of a year, the proportion of senior positions at private equity buyout firms globally that are being held by women has only increased from 8.7% to 9.0%. For venture capital firms, the proportion has not increased and has held steady at 11.2%. Real estate and infrastructure fund managers have seen the most notable changes, with the proportion of female employees holding senior positions at real estate firms increasing by 1.5 percentage points and at infrastructure firms by 1.2 percentage points.
Emerging private real estate managers (defined by Preqin as raising their first or second real estate fund) face an extremely challenging fundraising environment. Emerging real estate managers accounted for just 18% of capital raised globally by real estate funds closed in 2013, compared to 21% in 2012 and 34% in 2011.
New research in Preqin Special Report: Private Equity Funds of Funds shows that it is becoming an increasingly challenging fundraising environment for private equity fund of funds vehicles, with only 72 of these funds closing in 2013 raising an aggregate $12bn, compared to 87 funds closing on an aggregate $16bn in 2012 and a high of 164 funds closing on a total of $58bn in 2007. As a result many fund of funds managers are diversifying their activities and are starting to offer separate accounts to attract investors to their services. 65% of private equity fund of funds managers surveyed by Preqin stated that separate accounts would be as or more important to their investment activity in the next 12 months than commingled funds.
Latest figures from Preqin Investor Network reveal the extent to which the dynamics of fundraising have evolved in the current marketplace. Preqin’s latest industry analysis reveals 51% of institutional investors are now actively seeking out investments through proactively contacting fund managers, with 5,600 investment professionals using Preqin’s platform to source potential investments.
Since the launch of Preqin’s fund marketing platform in November 2013, which provides ove