Unveiling Global Capital Fundraising Trends: Where Are the Opportunities?

Are participants in the private markets looking ahead with optimism? SS&C Intralinks’ newly published 2024 Global Private Capital Fundraising Report, produced with data from PitchBook, indicates that despite continued economic uncertainty and global economic challenges, there are hopes for a resurgence of stability during the second half of this year.

In 2023, global private capital fundraising reached USD 1.3 trillion across 3,411 funds, exceeding expectations from our previous year’s report. Although this shift represented a 16.6 percent year over year (YoY) decrease compared to the heightened levels of 2022, overall, it marked a return to pre-pandemic fundraising activity levels. This relative slowdown from 2022’s highs was influenced by rising interest rates in the West, geopolitical uncertainties causing exit delays and only moderate levels of investor optimism. These factors contributed notably compared to the pandemic recovery process.

Notable market trends
Despite the overall decline in fundraising volume, certain sectors showcased resilience and made strategic moves that will potentially set up the remainder of 2024 to exceed 2023 figures.

Investors prioritize predictability
Private equity (PE) emerged as a strategic standout, accounting for 43.7 percent of the total funds raised in 2023 and increasing by an additional 11.6 percent in 2024. Conversely, real estate and venture capital (VC) saw decreases in fundraising activity. This signaled a shift in investor sentiments away from risk and toward diversified portfolios with more steady and predictable asset classes.

Shifting LP preferences
Another notable trend is declining overall fund counts, while fund sizes expand as limited partners (LPs) cut back on allocations by roughly half in comparison to numbers from last year. This shift indicates a growing preference among LPs to consolidate capital among fewer more experienced fund managers. This demonstrates that LPs are increasingly favoring established firms with proven track records, which is evident in the distribution of fundraising totals, with experienced firms raising 85.7 percent of total funds in the first two quarters of 2024.

Emerging trend in Asia
In Asia, there was a uniquely inverse trend compared to North America, with less capital distributed across more funds, and a 45.4 percent share of emerging firms represented in those funds compared to 17.4 percent globally.

Secondaries are on the rise
The continuation of challenging market conditions and rapid interest rate hikes have propelled secondaries into a renewed position of prominence. Investors looking for new liquidity solutions amidst tough exit markets raised USD 81.7 billion across 93 funds in 2023 — and the momentum continued into 2024. Despite not being a dominant strategy, investors are seeing lucrative returns that are driving them to continue flocking to secondaries.

Looking ahead
Despite slow fundraising momentum, facing adversities and slowdowns can open doors for General partners (GPs) to show resiliency and explore creative new ways to raise capital. It is recommended that fund managers use this time to their advantage to adapt their strategies to align with evolving investor expectations and market dynamics. This includes integrating digital solutions to enhance efficiency, improve data management and enhance regulatory compliance. Those who invest in increased digital capabilities will have the ability to become more competitive in the market and mitigate risks until capital mobilization becomes the next best move.

Fund managers must set realistic fundraising targets and manage investor expectations amidst the continued backdrop of economic uncertainty. GPs are encouraged to communicate effectively and transparently with their LPs regarding potential risks and returns to foster continued trust.

While the private capital fundraising landscape faces challenges, cautious optimism remains and those who succeed will be driven by adaptability and strategic alignment. Fund managers who navigate these complexities intelligently and strategically, leveraging new digital capabilities and measured expectations will continue to thrive despite continued macroeconomic headwinds.

Read the full 2024 Global Private Capital Fundraising Report produced with data from PitchBook to gain additional insights on the state of global fundraising.