The US private equity fundraising environment in 2017 shattered post-recession records. If early signs are any indication, 2019 could be nearly as lucrative.
Genstar Capital closed its ninth flagship fund on $5.5 billion Monday, easily surpassing a predecessor that raised $3.95 billion in 2017. The firm also raised $1.1 billion from select LPs and additional capital from other affiliated entities, bringing the fundraising total to roughly $7 billion. That’s big news for Genstar, which has emerged as a heavyweight in US private equity. In 2018, the San Francisco-based firm completed 79 PE deals, besting Audax Group (which had 62 transactions) to make it by far the most active PE firm in the US, per the PitchBook 2018 Annual Global League Tables.
It’s also big news for US private equity fundraising, which in 2018 experienced a roughly 28% YoY dip in total capital raised and a 19.5% YoY decrease in the number of closed PE funds, per PitchBook data. So far, 2019 hasn’t made up any ground when it comes to the number of closed vehicles. Capital raised, however, is on pace to reach roughly $220 billion, which would top last year’s figure and reach shouting distance of the record $232 billion raised two years ago.
The $34 billion already raised in 2019 is thanks in part to Thoma Bravo, which recently closed its 13th flagship effort on a staggering $12.6 billion. Yes, it’s still early, but the fundraising surge over the past two months seems to indicate that LP appetite for PE investment is as voracious as ever.
And there are plenty of mega-funds that could potentially close in the next 10 months. Vista Equity Partners is seeking $16 billion for its seventh flagship fund, which held an $11.4 billion first close this past September, per The Wall Street Journal. TPG Capital reportedly surpassed $10 billion in combined commitments for its eighth flagship buyout fund and a separate healthcare-focused vehicle this past August, with the former targeting $11 billion and the latter $2.5 billion. And Blackstone is reportedly in the midst of raising more than $20 billion for its eighth flagship fund, which would surpass a predecessor that raised $18 billion in 2015.