So far, 2017 has been one of the best years ever for private equity fundraising, with more vehicles hitting their targets than ever before. And the ease of gathering new capital commitments is bringing more and more firms into the fray.
I Squared Capital, TowerBrook Capital Partners and Terra Firma have become the latest players to seek billions for their upcoming vehicles, combining to target more than $15 billion, per various reports. While it seems unlikely all three vehicles will close by year end, they’re the latest examples of a environment that has 2017 on pace to challenge 2007 as the high-water mark for PE fundraising, at least in the US.
I Squared Capital has already raised around $5 billion for its latest infrastructure fund, which will have a target of $6.5 billion, according to Reuters. The firm closed its previous global infrastructure vehicle on $3 billion in 2015. The report comes about a week after I Squared agreed to acquire Hutchison Global Communications, a fixed-line telephone business operating in Asia, for about $1.9 billion.
Along with a handful of other enormous infrastructure vehicles, I Squared’s $6.5 billion target shows that the market’s seemingly limitless fundraising potential extends beyond buyout funds into other forms of private equity.
TowerBrook Capital Partners, meanwhile, has begun speaking with investors regarding a fund that could raise up to €5 billion, according to a Bloomberg report. The vehicle would be the firm’s first since it closed its fourth flagship fund on $3.5 billion in 2013. TowerBrook pursues control deals with large and mid-market companies in both the US and Europe, often targeting businesses with distressed parent companies or disagreements between management and shareholders.
Both I Squared and TowerBrook would join a trend of US buyout firms experiencing significant increases in fund size this year compared to their previous flagship vehicles.
Notable buyout fund step-ups in 2017
That brings us to Terra Firma, a UK-based investor that’s set a $3.42 billion target for its sixth flagship PE fund, per an SEC filing. The firm primarily invests in asset-backed industries such as energy, infrastructure, housing and agriculture. Its latest fund is a reminder that the fundraising free-for-all isn’t isolated to the US: CVC Capital Partners and Partners Group are among the European firms to close huge funds in 2017.
Much of the focus in 2017’s PE fundraising scene has been on the big names, be it CVC, Apollo Global Management or The Carlyle Group. But I Squared, TowerBrook and Terra Firma’s newest offerings are a reminder that the bonanza extends beyond the industry’s behemoths. For just about everyone, it seems now is a good time to launch a PE fund.