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

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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