Only 244 funds managed to raise capital in the second quarter, the lowest in five years, according to Preqin. The amount of acquisitions is also falling sharply, a sign of a slowdown according to the benchmark unlisted analysis firm.
“Navigating the unlisted has become more difficult than ever”. Worse, the market has entered “A worrying period of decline”, according to Preqin, the benchmark analysis firm in private equity. The pace of fundraising has stalled from its highest levels of 2017. Both LBO (large acquisitions financed by debt) and venture capital deals have declined in number and value since January. At the same time, the stock of capital that the funds have to deploy crossed a new high at the end of June, at 1.540 billion dollars.
Europe attracts less
Only 244 funds managed to complete their fundraising in the second quarter, a sharp decline over one year (399 in the second quarter), and a division of more than half compared to 2017 (503). Most of the 200 billion dollars raised in the world are concentrated in the hands of the best, and increasingly quickly (41% raised in less than six months). Since then “Those who are in the market for a significant period face a tough challenge to secure their funding”, says Preqin.
European funds, in particular, attract less, points out the cabinet. Only 49% of investors now plan to deploy capital in funds in the region, against 61% in the second quarter of 2018. A disaffection that Preqin attributes to the uncertainties of Brexit.
In addition, if in number, the dynamics of acquisitions led by LBO funds is almost stable in the world, in amount it is less important: 75 billion dollars were spent between March and June. Over the previous three months, it was 102 billion, and even more in early 2018. In North America, the value of deals even fell from 68 billion to 38 billion, the lowest level since the first quarter of 2017.
Prices that dissuade
Same trend in the venture. More than 3,263 investment transactions were signed during the quarter for 52 billion, against more than 4,300 (77 billion dollars) a year earlier.
Has private equity therefore eaten its white bread? Preqin puts forward several explanations. In Asia, the values of tech companies have peaked. In Europe and the United States, the slowdown in acquisitions is also due to very high values as well as questions surrounding the rate policy of the European Central Bank. ” There is no simple solution », Concludes the cabinet.