Alternative investment fundraising slowed in the third quarter when 246 funds closed on a total $122 billion, the lowest number of funds closed since the first quarter of 2013, said a report released Tuesday by alternative investment research firm Preqin.
Preqin expects the number for the capital raised in the third quarter to increase by 10% to 15% as it gets more information. The total capital raised will most likely be comparable to the $131 billion raised in the first quarter, the report noted.
However, the total capital raised and number of funds closed is down from the second quarter when 315 funds raised a combined $173 billion and a drop from the third quarter of 2015 when 298 funds raised $169 billion.
Of the total private capital raised, private equity fundraising dropped to 170 funds with a total $62 billion in the third quarter from 217 vehicles raising $111 billion in the second quarter and 268 funds raising a combined $71 billion in the third quarter of 2015. Preqin also expects the total capital raised number for the third quarter to increase by 10% to 15%.
Private debt fundraising was also down with 22 funds collecting $9.6 billion in the third quarter, a 52% drop in capital raised from the 33 funds that raised $20 billion in the second quarter. It is also a 69% drop in capital raised from the 40 private debt funds with a total $31 billion closing in the third quarter of 2015.
Real estate fundraising also fell in the third quarter with 32 funds securing $19 billion, down from 46 funds raising $31 billion in the second quarter and 50 funds raising $41 billion in the third quarter of 2015.
The lone bright spot was infrastructure with 17 funds closing on $23 billion in the third quarter, which is close to the highest ever quarterly total infrastructure capital raised — $24 billion in the fourth quarter of 2013. Third-quarter infrastructure fundraising was up from the 10 funds that raised $7 billion in the second quarter and the 18 funds that raised $17 billion in the third quarter of last year.
There are now 2,935 alternative investment funds seeking a total of $983 billion, up from 2,798 funds seeking a combined $938 billion in July.
Dry powder is climbing. Private equity managers had $857 billion in dry powder, up from $757 billion at the end of 2015; private debt managers had $199 billion, up from $190 billion at the end of 2015; real estate had $230 billion, up from $210 billion at the end of 2015; and infrastructure managers had $147 billion, up from $106 billion in dry powder held at the end of 2015.