Titanbay | Fundraising – will less market froth create more investment discipline?

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With nearly $12 trillion raised, the decade leading up to 2022 was truly remarkable for growth in private capital fundraising.1 But since then the pace of growth has slowed considerably, leaving us amid the most competitive market for new capital since the last global financial crisis (GFC).

Global consultancy firm Bain & Company recently estimated that the total amount of capital raised in private market strategies over 2023 will be 28% lower than in 2022. Although Bain expects the total for this year to exceed $1 trillion, this would represent the lowest yearly amount since 2015. It would also be a significant reduction compared to the record fundraising activity in the post-Covid boom years of 2021 and 2022.2

The same report cites figures from research-firm Preqin stating that nearly 14,000 private capital funds are pursuing $3.3 trillion across various asset classes. If this is the case, around 70% of the available allocation could go unfilled in 2023.

While all of this points to a reduction in the amount of capital available to general partners (GPs), there is some cause for optimism as a reduction in market froth could result in a more grounded and disciplined investment landscape.

…a reduction in market froth could result in a more grounded and disciplined investment landscape.