Private equity fundraising in 2011 is on pace to top 2010. Much of this
increase is driven by middle market funds, which continue to outpace activity at
the upper end of the market.
After year-over-year increase of 15.7% in the second quarter, fundraising in
the third quarter of 2011 slowed as private equity funds continue to work
through a capital overhang of nearly $400B. However, the $17B closed on by 27
funds in the third quarter puts 2011 on track to surpass 2010 in terms of total
Driving the increase in fundraising are middle market private equity funds,
which, as of the close of the third quarter, had raised approximately $64.5B of
the $79B raised to date in 2011. This focus on middle market fundraising is
consistent with data that shows middle market companies accounting for
approximately 90% of deal flow through the first half of 2011.
The lag in third quarter fundraising comes at a time when the market saw an
increase of funds raising capital of 14% over the second quarter. This increased
competition for a diminished pool of limited partner capital means that some
funds may not hit their fundraising targets as 2011 comes to an end.
The private equity fundraising data referenced above was provided by Pitchbook and is shown in the
following charts (click
Private Equity Practice Group at McGuireWoods LLP is dedicated to keeping
clients advised of new legislative and business developments as they occur. If
you have any questions regarding these issues, please feel free to contact your primary
attorney at McGuireWoods LLP, or any of the authors.