Jan 10, 2020

U.S. private equity firms raised record $300 billion in funding in 2019

Illustration: Illustration: Lazaro Gamio/Axios

U.S.-based private equity firms raised more than $300 billion for new funds in 2019, according to data released this morning by PitchBook.

The intrigue: It's an all-time record, topping the $241 billion raised in 2016, and a 52% bump over the $198 billion raised in 2018.

The big picture: Part of the bump is just cyclical, as large private equity firms now tend to raise new flagship funds every two or three years. But there also are several other factors in play, per conversations with placement agents and limited partners:

  1. Product proliferation: Private equity firms used to just raise a single series of funds, with a consistent strategy. But many of them now also raise sector-specific funds, funds focused on specific geographies, or on different sorts of deals (small-cap, growth equity, distressed, etc.).
  2. Denominator effect: The bull market for public equities has inflated the amount of dollars available, assuming constant LP target allocations.
  3. Mainstreaming: Private equity is becoming more commonly-accepted among institutional investors and, in particular, large sovereign wealth funds. It's a voracious, double-sided supply/demand situation.

But, but, but: Every source I spoke with warned that "vintage years" with huge fundraising totals have a lousy historical record when it comes to returns.

The bottom line: Private equity has more money than ever before, which means it will keep offerings premiums to already-high prices, and also pounce if the bull ever dozes off.

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Private equity should breathe a sigh of relief as Sanders surges

Photo Illustration: Sarah Grillo/Axios. Photo: Robyn Beck/AFP via Getty Images

Bernie Sanders has opened up leads in both Iowa and New Hampshire, according to most recent polls.

The big picture: Private equity might be hyperventilating into a paper bag, but it should be breathing a sigh of relief. At least temporarily.

Go deeperArrowJan 28, 2020

Private equity firms fear a Democrat topping Trump in 2020

Illustration: Aïda Amer/Axios

Private equity firms will rush the exits if they believe that a Democrat is likely to defeat President Trump, investors tell me.

The state of play: Each of the four leading Democratic candidates have pledged to eliminate beneficial tax treatment for capital gains among top earners.

Go deeperArrowJan 14, 2020

Private equity "plague" descends on Germany's elevator industry

Illustration: Aïda Amer/Axios

In 2005, a top German politician famously referred to private equity as a "plague of locusts," long predating U.S. political hostility toward the industry. Now, private equity is about to learn if German sentiment has softened.

Driving the news: At least four PE groups are vying to buy the elevator business of German industrial conglomerate Thyssenkrupp, with expectations that the deal value could top $20 billion.

Go deeperArrowJan 16, 2020