Private capital fundraising in India slowed down in 2018, alternative asset data tracker Preqin said, adding fewer funds achieved a final close during the year.
Private capital refers to alternative asset classes such as private equity, private debt, real estate and infrastructure.
A Preqin report said that fund managers raised $757 billion in 2018, against a record of $925 billion in 2017, while only 1,733 funds achieved a final close, down by 28% from the 2,410 funds in 2017.
However, despite the slower pace of fundraising, fund managers were raising larger amounts with at least 17 funds seeking $10 billion, or more, from investors, to become the largest ever private equity, venture capital, real estate, infrastructure and secondaries vehicles. “This seems likely to increase the divide between the top and bottom ends of the market. At a time when investors are concerned about the prospect of a market correction, many will be seeking to invest with firms they have invested with before,” the Preqin report said, adding that investors expect to commit more capital to alternative asset managers in 2019.
“Despite concerns about a potential market correction, large proportions of investors in every private capital asset class said they would commit more capital in 2019 than they did in 2018. Interim fundraising bears this out–of the 5,000 funds in the market, around 3,000 have already held an interim close and have secured more than half a trillion dollars. It seems that investors are still committing significant sums to private capital, and so, we can expect the robust pace of fundraising to continue well into 2019,” the report said.
Private equity funds raised $426 billion compared with a high of $566 billion in 2017. Only 1,175 private equity funds announced a final close last year, down from the 1,670 that hit the milestone in 2017.
Funds of $1 billion, or more, secured $264 billion, making up 62% of total fundraising, while the 10 largest funds alone accounted for almost a quarter of capital raised. “Private equity fundraising is increasingly a two-tier market. Billion-dollar funds accounted for two-thirds of all capital in 2018, and most of the largest fund managers say that they are routinely oversubscribed. Although investor appetite for smaller funds exists, with concerns regarding a market correction, the bifurcation between smaller managers and larger managers is likely to become more pronounced in the months to come,” said Christopher Elvin, head of private equity, Preqin.
Infrastructure-focused funds hit an all time high in 2018, raising $85 billion, as against the $75 billion in 2017.
Source: Mint