The Buyouts 100: Our list of the largest private equity fundraisers in North America
Is the private equity fundraising bacchanalia finally coming to an end? The numbers in our roundup of the 100 biggest North American fundraisers indicate that the party was going stronger than ever in 2021. A lofty $1.64 trillion was raised by this year’s Buyouts 100, with the five-year fundraising total of the top 50 firms hitting $1.34 trillion, up from $1.1 trillion on last year’s list. The top 10 alone in our tally raised $553 billion, up from $499 the year before. Hats off to Daniel Humphrey Rodriguez and Tom Zimmermann for compiling this year’s list.
But as we chatted with LPs and GPs, the picture is getting murky, if not gloomy, for this year’s fundraising. Front and center: GPs are continuing to come to market with new funds, but there is talk that some LPs already blew through their allocations by Memorial Day. As one LP says: “It’s not clear that the GPs have gotten the picture totally that the LPs are slowing down.”
One wonders, with the spigots dry, will LPs turn off their laptops, lock their doors and head to the beach this summer? As one head of private equity at a large LP explains: “We’re definitely stung by the allocation issue. We had to cut a lot of managers; we had too many people out fundraising.”
And as is the case with people in many vocations these days, LPs are burning out. As funds keep coming to market, the LPs simply do not have enough time in the day to do their due diligence when allotting their dwindling resources. Another complication: with the economic picture so turbulent (the S&P 500 in ursine territory, recession fears, uncertain company valuations), GPs are holding off on exits, so the flow of distributions that used to go back to LPs from sales of portfolio companies is drying up.
Drew Schardt, of Hamilton Lane, puts it succinctly: “If you’re an LP in today’s market, life is not easy. You have a lot of difficult choices to make.”