Private Placement Industry Insights as of April 30, 2020

Thursday, May 7th, 2020 and is filed under Industry Reporting

We recently released our April Private Placement Insights. See the highlights from the report below, or if you are a Premium Reporting subscriber, log in now to see the entire report. If you don’t have access, you can request a free trial.

  • 10 new private placements were added to our coverage in April, ahead of last year’s levels on a YTD basis but below the last couple of months. The industry is still led by real estate funds including 1031s and real estate LPs and LLCs, although 1031s have slowed significantly.
  • As of May 1st, AI Insight covers 177 private placements currently raising capital, with an aggregate target raise of $17.1 billion and an aggregate reported raise of $8.4 billion or 49% of target. The average size of the current funds is $96.7 million, ranging from $3.5 million for a single asset real estate fund to $2.5 billion for a sector specific private equity/debt fund.
  • 12 private placements closed in April, having raised approximately 63% of their target and having been on the market for an average of 422 days. Two private placements suspended offerings due to uncertainties related to COVID-19.
  • ON DECK: as of May 1st, there were three new private placements coming soon.

Private Market Update: COVID-19

  • According to a recent report by Preqin, COVID-19 has disrupted the private capital markets significantly across all categories.
  • Fewer private equity funds met their target fundraising goals and were able to close in Q1 versus prior quarters. Many had established high fundraising targets prior to COVID-19.
  • Private equity fundraising was actually up year-over-year, with the largest and most established funds securing the majority of capital raised.
  • Fewer private equity transactions were completed as managers held off on M&A activity anticipating that asset prices would fall in a recession.
  • The level of dry powder in the private equity industry is at a record $1.4 trillion as of April 2020. Additionally, 2019 vintage funds, which were originally projected to underperform prior vintages, are now more likely to outperform given the drop in asset prices.
  • Private debt fundraising declined in Q1. Direct lending and special situations funds accounted for the majority of fundraising within the category.
  • Private real estate fundraising fell in Q1 2020. Managers raised $81 billion from 51 funds versus $51 billion from 83 funds in Q1 2019.
  • Private real estate transactions also declined year-over-year, with 1,797 deals completed in Q1 2020 compared to 2,417 deals in Q1 2019.
  • Within the real assets category, infrastructure and natural resource fundraising actually increased, and the volume of infrastructure transactions was in line with the prior year. Energy slowed significantly, while social infrastructure sectors such as telecom actually saw increases in fundraising and deal activity.
  • Hedge fund launches have stalled from prior months, especially in the equity strategy sector. This makes sense given the recent downturn, although most hedge fund categories performed as expected. The Preqin All Strategies Hedge Fund benchmark declined 10.38% in Q1 2020, compared to the 20% loss in the S&P 500 Index.

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Chart and data as of April 30, 2020, based on programs activated on the AI Insight platform as of this date.

Activated means the program and education module are live on the AI Insight platform. Subscribers can view and download data for the program and access the respective education module.

On a subscription basis, AI Insight provides informational resources and training to financial professionals regarding alternative investment products and offerings. AI Insight is not affiliated with any issuer of such investments or associated in any manner with any offer or sale of such investments. The information above does not constitute an offer to sell any securities or represent an express or implied opinion on or endorsement of any specific alternative investment opportunity, offering or issuer. This report may not be shared, reproduced, duplicated, copied, sold, traded, resold or exploited for any purpose. Copyright ©2020 AI Insight. All Rights Reserved.