According to private equity data provider Pitchbook, 2019 has been an amazing year for private equity. As of November 6, 2019, the total amount of capital raised by the private equity industry is at $246.3 billion. Strong, incredibly strong. In fact, according to Pitchbook, 2019 will be the largest private equity fundraising year ever.
The massive 2019 year comes off a relatively weak 2018, when the private equity industry “only” fundraised $195.6 billion. Not bad, but weak compared to the prior years’ fundraising numbers of $218.9 billion and $238.1 billion, respectively (2016/2017).
Prior to this year’s meteoric rise, 2017’s $238.1 billion had been the all-time high, slightly besting 2007’s fundraising effort of $235.4 billion.
It is truly an amazing time to be working in private equity. Private equity fundraising has come a long way from the 2010 bottom of just $59.2 billion and just 146 funds.
Can the Wheels Keep Turning Into 2020?
The all-time fundraising of 2019 leads to the obvious question – Can the private equity keep the wheels turning in 2020?
On the one hand, all good things must come to an end. The economic expansion has been good to the private equity industry. But, some cracks in the fabric of the expansion are beginning to appear. Investors are nervous about the economic outlook, and the risk presented by locking up large sums of money into investments at a potential economic peak.
On the other hand, large investors still see the potential benefits of locking up their money in private equity investments as an important asset allocation strategy. The potential returns are just too big to ignore in a well-balanced asset allocation strategy.
Which view will win out in 2020? If big private equity investors are the best indications of where private equity fundraising is heading, then 2020 could be another banner year. Brookfield just closed its 5th massive private equity fund on $9 billion in fundraising. Blackstone, one of the kings of the industry, announced in September that it had raised $26 billion for its eighth flagship fund – the largest private equity fund to date.
Will 2020 be a year to remember? Take your guess now – the future belongs to those who guess right.
Conclusion
It is an amazing time to be a private equity fundraiser. The most recent figures out of Pitchbook suggest that 2019 may end up being the biggest year ever for private equity fundraising, perhaps surpassing $300 billion in funds raised. The incredible picture presents the question – Can 2020 keep up the good times? No one knows, but if you are an investor, it is worth thinking about.
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