Excerpts from the article:
This year could well match 2014, says Jeff Davis, partner at Eaton Partners, a placement agent firm for alternative funds.
“We’re extremely encouraged about this year, even if we don’t know yet whether it will top last year,” he says.
Real estate was the clear fundraising star for the first quarter for U.S.-based managers, pulling in $26.6 billion across 17 funds out of the $66 billion raised overall by 97 funds, according to Preqin’s data. That’s in part due to recent strong results, Davis says.
“Performance of real estate funds raised right after the crisis have been very compelling and that has prompted many LPs to take a look at the asset class again after shunning it for a while,” he says. “We’re also seeing some newer managers who have unique approaches to real estate investing, especially outside of the U.S., that have attracted LP attention.”
The next-biggest segment attracting capital for U.S.-based managers was buyout strategies, which raised $18.2 billion across 15 funds that closed in the first quarter, followed by venture capital with $6 billion across two funds.
One area of the buyouts segment that is getting a lot of inquiries from limited partners is funds targeting lower- to middle-market companies, Davis says. That interest cuts across industry sectors and even geographies, as institutions see promise in fund managers that can take small companies, infuse them with operational improvements and management expertise, and then spin them out to larger buyout firms down the line, he says.
Another area of interest for limited partners is Europe-focused fund managers, says Davis, whose firm co-hosted a “roadshow” for a dozen European private equity fund managers this year, meeting with 70 institutional investors in Boston, Chicago, and New York. “There are some great opportunities and dislocation in the markets that LPs see in Europe,” he says. “A lot of them had been sitting on the sidelines. And many of them are now looking beyond pan-European funds, looking for more concentrated bets at a country level.”
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