Of the five $10 billion+ funds raised this year, four of them held final closes in the second quarter, including CVC Capital Partners (€16 billion in June), Vista Equity Partners ($11 billion in May) and Silver Lake and CD&R both closing funds in April at $15 billion and $10 billion, respectively. About $54 billion in total, those four PE funds help explain the quarterly spike in global PE fundraising, which popped 41% QoQ to $106.2 billion.
Here's a look at how those mega-funds are bolstering this year's fundraising totals in the US:
The new funds are renewing the old conversation around return expectations for the funds’ backers. Howard Marks of Oaktree, for one, believes “private equity has been knighted” by LPs looking for “high returns in a low-return world,” adding that investors have warmed to the risks of PE given muted returns in equities and fixed income.
An analyst at Reuters agreed but added that the Leon Blacks of the world, like the proverbial hikers who encounter a bear in the woods, "only need to outrun their peers, not the bear." If that turns out to be true, that might prove to be a big difference between today’s string of blockbusters and the last wave of mega-funds raised 10 years ago, which had to race against several bulls.
Note: This column was previously published in The Lead Left.
For more data and analysis on the fundraising scene, download our 2Q 2017 US PE Breakdown.