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  • D O W N L O A D D A T A P A C K : w w w . p r e q i n . c o m / q u a r t e r l y u p d a t e

    PREQIN QUARTERLY UPDATE: PRIVATE EQUITY & VENTURE CAPITAL Q1 2019

    Fundraising Funds in Market

    Investors Deals

    Performance Dry Powder

  • P R E Q I N Q U A R T E R L Y U P D A T E : P R I V A T E E Q U I T Y & V E N T U R E C A P I T A L , Q 1 2 0 1 9

    2 © P r e q i n L t d . / w w w . p r e q i n . c o m

    The definitive guides to private capital and hedge fund markets

    In-depth review of 2018 Find comprehensive reviews of market performance, fundraising and deal activity over the year, in granular detail.

    Expert predictions for 2019 Subject-matter experts from around the industry deliver key forecasts and discuss geopolitical and disruptive trends for the year ahead.

    Navigate the cycle An exclusive look at where institutional investors and alternative assets fund managers will put their money, their views on cyclical trends and performance, and their long-term plans. All taken from the results of the largest survey of alternative assets decision-makers you’ll find anywhere.

    Get the full reports at www.preqin.com/reports

    Social icon

    Rounded square Only use blue and/or white.

    For more details check out our Brand Guidelines.linkedin.com/company/preqin @preqin

    Preqin Global Alternatives Reports

  • 3

    D O W N L O A D D A T A P A C K : w w w . p r e q i n . c o m / q u a r t e r l y u p d a t e

    FOREWORD

    The private equity industry is preoccupied by a key question in 2019: which sectors will be worst affected by the expected equity market downturn? Fund managers and investors alike widely believe it is due within the next 12-24 months, so are positioning themselves accordingly – and their preparations are driving industry trends in Q1.

    For investors, the overall appeal of private equity has not diminished. Historically, the asset class has consistently outperformed public markets, even through previous financial crises. Beyond return generation, private equity investments offer diversification and inflation-hedging advantages which are particularly appealing to investors looking to protect their portfolios. However, in a period of uncertainty, investors are exercising caution, so capital is increasingly concentrating at the top end of the industry. This poses an ever more challenging landscape for smaller managers trying to secure funding.

    On the deal-making side, it is a different story: both buyout and venture capital saw record levels of deal-making in 2018, and much of that momentum has carried over to the first part of this year. Dry powder has continued to accumulate, and yet fund managers are clearly able to put capital to work, despite

    concerns about high asset pricing and competition for deals. The pressure that competition puts on future returns is undeniable and, though it may be that the days of double-digit performance for the industry are over, many fund managers and investors still see private equity as a strong performer in the months and years to come.

    CONTENTS 4 F u n d r a i s i n g

    6 F u n d s i n M a r k e t

    7 I n v e s t o r s

    8 B u y o u t D e a l s

    9 V e n t u r e C a p i t a l D e a l s

    10 P e r f o r m a n c e & D r y P o w d e r

    CHRISTOPHER ELVIN Preqin

    All rights reserved. The entire contents of Preqin Quarterly Update: Private Equity & Venture Capital, Q1 2019 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Preqin Quarterly Update: Private Equity & Venture Capital, Q1 2019 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of Preqin Quarterly Update: Private Equity & Venture Capital, Q1 2019. While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Preqin Quarterly Update: Private Equity & Venture Capital, Q1 2019 are accurate, reliable, up-to-date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Preqin Quarterly Update: Private Equity & Venture Capital, Q1 2019 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.

    The definitive guides to private capital and hedge fund markets

    In-depth review of 2018 Find comprehensive reviews of market performance, fundraising and deal activity over the year, in granular detail.

    Expert predictions for 2019 Subject-matter experts from around the industry deliver key forecasts and discuss geopolitical and disruptive trends for the year ahead.

    Navigate the cycle An exclusive look at where institutional investors and alternative assets fund managers will put their money, their views on cyclical trends and performance, and their long-term plans. All taken from the results of the largest survey of alternative assets decision-makers you’ll find anywhere.

    Get the full reports at www.preqin.com/reports

    Social icon

    Rounded square Only use blue and/or white.

    For more details check out our Brand Guidelines.linkedin.com/company/preqin @preqin

    Preqin Global Alternatives Reports

  • P R E Q I N Q U A R T E R L Y U P D A T E : P R I V A T E E Q U I T Y & V E N T U R E C A P I T A L , Q 1 2 0 1 9

    4 © P r e q i n L t d . / w w w . p r e q i n . c o m

    FUNDRAISING

    Historically, the first quarter of the year is a quieter period for fundraising; this was certainly the case for Q1 2019, as both the number of funds closed and the total capital raised declined from Q4 2018 (Fig. 1). Appetite for the asset class remains strong, though, despite concerns about a potential market downturn: 219 funds raised a combined $100bn in Q1, in line with the $95bn secured in Q1 2018. Where figures differ, though, is the number of funds closed in each period, with 340 funds closed in Q1 2018. Capital is becoming more concentrated among a small number of large

    funds, and Q1 2019 is on course to mark a five-year low in the quarterly number of funds closed.

    While Asia has come to the forefront of the industry in recent years, fundraising activity seems to be refocusing on North America, and vehicles targeting the region marked their second highest Q1 fundraising total (133 funds secured $63bn, Fig. 3). Conversely, Europe-focused activity struggled to rebound from its fundraising lull, with Q1 2019 recording the lowest level of activity in an opening quarter since 2015.

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

    2014 2015 2016 2017 2018 2019

    No. of Funds Closed Aggregate Capital Raised ($bn)

    Fig. 1: Global Quarterly Private Equity Fundraising, Q1 2014 - Q1 2019

    Source: Preqin Pro

    51

    115

    29

    8 4 12

    62.0

    17.0 16.0

    1.6 0.5 3.1

    Buyout Venture Capital

    Growth Fund of Funds

    Secondaries Other Private Equity*

    No. of Funds Closed Aggregate Capital Raised ($bn)

    Fig. 2: Private Equity Fundraising in Q1 2019 by Fund Type

    Source: Preqin Pro

    9% 7% 7% 4% 3% 1%

    23% 21% 20% 20% 19% 15%

    26% 28% 29% 32% 39% 42%

    22% 22% 27% 25% 22% 25%

    19% 22% 17% 19% 17% 17%

    2014 2015 2016 2017 2018 Q1 2019

    125% or More

    101-124%

    100%

    50-99%

    Less than 50%

    Fig. 4: Private Equity Funds Closed by Proportion of Target Size Achieved, 2014 - Q1 2019

    Source: Preqin Pro

    133

    46

    28

    12

    63.3

    21.6 13.9

    1.4

    North America Europe Asia Rest of World

    No. of Funds Closed Aggregate Capital Raised ($bn)

    Fig. 3: Private Equity Fundraising in Q1 2019 by Primary Geographic Focus

    Source: Preqin Pro

    *’Other Private Equity’ includes balanced, co-investment, co-investment multi-manager, direct secondaries and turnaround funds.

    No . o

    f F un

    ds Cl

    os ed

    Aggregate Capital Raised ($bn)

  • 5

    D O W N L O A D D A T A P A C K : w w w . p r e q i n . c o m / q u a r t e r l y u p d a t e

    Among Asia-focused funds this downward trend is even more pronounced: 28 funds secured $14bn in Q1 2019, which represents the fifth consecutive quarterly decline in the number of funds closed, as well as the second-lowest q

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