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Fundraising for buyout funds in 2022 projected to outpace 2021

by Andrés Ramos, Content Marketing Specialist – Nasdaq Private Fund Solutions

2022 set to be a big year for buyout

According to confirmed data and projections from Nasdaq eVestment, 133 buyout funds will be in market fundraising for a first close between Q1 and Q4 2022. Data on confirmed funds is sourced from fundraising GPs and trusted media outlets while projected funds are determined using proprietary analysis of historical vintage year, fund size, and commitment pacing data.

In total these new buyout funds are seeking to raise $340 billion from investors, a 47.4% increase from the total sought by funds with first closes in 2021. While the average size of funds in market decreased slightly from 2021 to 2022, $2.64 billion to $2.55 billion, the percent of funds targeting fund sizes over $1.5 billion has grown 17%.

A crowded field for experienced managers

A noticeable difference between the funds raised in 2021 compared to those coming to market in 2022 is the percent of developed or established fund series that fall into ordinal groupings IV – VI and VII – IX respectively. 2022 will see a 150% spike in the percent of funds VII – IX raising capital while the fund IV – VI cohort will see a 30% increase. All this suggests that even seasoned GPs can expect to face stiff competition on the fundraising trail in the coming year.

Buyout Funds, First Close Q1 2022 – Q4 2022
Fund Size Breakdown

Fund Size20212022
<$500mm 38% 26%
$500mm - $1.5bn 33% 40%
$1.5bn - $5bn 15% 17%
>$5bn 14% 17%

Buyout Funds, First Close Q1 2022 – Q4 2022
Fund Ordinal Breakdown

Fund Ordinal20212022
Fund I - III 44% 22%
Fund IV - VI 38% 50%
Fund VII - IX 8% 20%
Fund X+ 10% 8%

LP investors will be busy

On the other side of the table, LPs will also have their hands full conducting due diligence on new commitment opportunities in 2022. Fund managers have been putting capital to work faster than ever in recent years and as a result are also coming back to market more quickly. Fundraising cycles that were once 4-5 years are now 2-3 years.

Institutional investors who had strategically staggered their commitments to strong managers across different vintage years are now faced with many of these GPs raising new funds at the same time. This puts a strain on their due diligence capabilities as each new fund from existing GP relationships must be reviewed prior to a new commitment. Additionally, pacing plans and limits on portfolio allocations mean that some investors may be unable to re-up with all their existing managers who are fundraising.

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