PitchBook's latest analyst note devoted to private equity explores first-time PE funds in depth, ranging from forecasting future fundraising to their performance relative to more established fund managers, especially as recently launched vintages are seeing first-time funds outperform follow-on vehicles.
- First-time PE funds have made a resurgence in recent years, driven by the broader exuberance in private market fundraising. In 2016, first-time managers raised $14.05 billion across 36 first-time vehicles, accounting for 8.3% of fundraises year to date.
- Contrasting the underperformance of 2003-2005 vintages, first-time PE funds have outperformed follow-on funds in more recent vintages. For 2012-2014 vintages, first-time PE funds have produced a median IRR of 17.1%, compared to 10.8% for follow-on funds.
- Against a backdrop of intense limited partner interest for private market exposure, we expect first-time fundraising to continue growing in the near term. There are currently 26 first-time PE funds in the market that have held at least one preliminary close.