In a previous post, we analyzed a steady recovery in the number and aggregate value of first-time funds in the US private equity middle market, yielding the conclusion that in light of the slower pace of such pools raised in 1Q, there's potentially a somewhat slackened appetite for exposure to that competitive playing field.
That said, it's still important to highlight one important piece of the overall backdrop to middle-market fundraising: Just how large a portion of overall US PE fundraising it now constitutes. As the chart above highlights, middle-market-dedicated funds—vehicles sized from $1 billion to $5 billion—made up 70% of overall US PE raises in the first quarter of 2017, the highest tally of the decade. Capital committed is a different story, yet still hefty at 63%.
What those figures taken in tandem further underline is the popularity of the US middle market as a destination for PE capital allocation. That has engendered growing competition, which in turn impacted fledgling fundraises. Going forward, however, the necessity for continued exposure to the bulk of US middle-market enterprises will still be necessary for many PE players, especially as public equities remain priced aggressively and general M&A valuations stay high.