LPs Targeting More Small and Middle-Market U.S. Funds
July 31, 2014
U.S.-focused private equity funds are getting smaller, according to PitchBook's 2H 2014 U.S. Fundraising and Capital Overhang Report. Funds of $100 million or less accounted for 37% of all PE fund closings in 1H 2014, compared to about 25% of all closings during the buyout boom years. Smaller funds are seen as less competitive and less pricey than bigger PE funds, particularly as the upper end of the market has seen valuations go higher and higher.
The U.S. PE capital overhang decreased somewhat in 2013, down 5% from 2012 to $486 billion. About 58% of dry powder resides in the 2012 and 2013 vintages, though about $100 billion remains uncalled in 2006, 2007 and 2008 vintage funds.
Highlights from this report include:
• 87% of all PE funds reached their targets in 1H 2014
• Buyout funds accounted for more than 60% of all funds closed in 1H
• Six $1 billion+ VC funds closed in the first half, but micro-funds made up more than 60% of funds raised
• The median VC fund size hit a decade low in 1H 2014