Skip to main content
MENU
Subscribe
  • Login
  • My Account
  • Logout
  • Register For Free
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • CIOs
    • Consultants
    • Defined Contribution
    • ESG
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Private Credit
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • Special Reports
    • Washington
    • White Papers
  • International
    • U.K.
    • Canada
    • Europe
    • Asia
    • Australia - New Zealand
    • Middle East
    • Latin America
    • Africa
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Influential Women in Institutional Investing 2024
    • Eddy Awards
  • Resource Guides
    • Active Thematic Global Equities
    • Retirement Income
    • Fixed Income
    • Pension Risk Transfer
    • Pooled Employer Plans (PEPs)
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • DC Plan Design: Improving Participant Outcomes
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
  • Print
Breadcrumb
  1. Home
  2. Private Equity
July 19, 2022 06:07 PM

New headwinds slow private equity fundraising, deal activity

Bailey McCann
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    SLIDESHOW2_601009999_PH_11_OUBYQLBNHJFM.jpg

    Record inflation, rising interest rates and a significant slowdown in M&A activity are creating new challenges for private equity managers and asset owners, according to a new report from Boston-based management consultancy Bain & Co.

    According to the firm's midyear update, the first half was still a relatively strong one for private equity firms. Globally, private equity generated approximately $512 billion in buyout deal value during the first half of 2022, putting the industry on pace for the second-highest annual total ever, the report says. Private equity has generated $1.7 trillion of deal value over the past 18 months. The average deal size in the first half of this year was approximately $1 billion.

    Related Article
    Fundraising for private equity, real estate slowing dramatically — Preqin reports

    The report shows there is still $3.6 trillion of cash waiting to be put to work and that allocators plan to maintain or increase allocations to the asset class. These factors position private equity to weather inflation and other sources of volatility, but some cracks are beginning to show.

    Report data show that fundraising has started to slow down following several years of elevated activity. Globally, private equity raised $645 billion in the first half of 2022, compared to $789 billion during the first half of 2021. Buyout funds specifically saw a steep decline, raising $138 billion in the first half of 2022 vs. $284 billion over the same period in 2021.

    Fund managers reposition as recession potential grows

    Fundraising isn't the only place showing signs of a slowdown. Private equity managers are positioning themselves and their portfolio companies more defensively, according to the report. Inflation is one factor, but debt financing has also increased in cost with the uptick in interest rates. The growing potential for a recession may mean it makes more sense to hold companies for longer or wait to make new investments if a fund lifecycle allows for it, the report said.

    Report data shows that the exit market has changed significantly. Global buyout-backed exit value hit $338 billion in the first six months of the year, a decline of 37% from the same period a year ago, the report said. Global IPO value saw a 73% decline in the first half of 2022, falling to $91 billion. Bain said the data suggests that this will increase holding periods for companies that may not be suitable for sale to another private equity manager, strategic buyer or other investor.

    Investors and private equity managers are turning to the secondaries market to manage entry and exit points in an environment where it is harder to list companies. Bain & Co. data shows that the volume of secondary transactions grew to $132 billion in 2021 from $40 billion in 2015. Activity in the secondaries market is likely to remain elevated in this environment, the report suggests.

    Despite the slowdown, for investors and fund managers that can ride out the current storm there may be some bargains on the other side. "The IRR (internal rate of return) from investments made during recovery years has consistently outperformed the long-term averages, especially investments in top-quartile deals," the report said.

    Related Articles
    Private equity faces 'crisis of value' over inflated prices
    Private equity returns significantly top public equity for state plans – study
    AIMCo private equity head says slow fundraising giving investors a breather
    Recommended for You
    Blackstone signage from outside the firm's New York headquarters
    Blackstone seeks $5.6 billion to back other private equity firms
    Justin Herbert of the L.A. Charges about to take a snap against the Denver Broncos.
    L.A. Chargers in talks to sell stake to private equity firm Arctos
    San Bernardino County Courthouse with palm trees in front of it.
    SBCERA approves emerging managers private equity program, plans initial $200 million commitment
    Sponsored
    White Papers
    The State of Lifetime Income Report
    The Next Wave of LDI Evolution
    Retirement security to future income wins, TIAA brings you the latest financial…
    U.S. Public Funds Top Performers: Q2 2024
    Generative AI Investing: Opportunities at a Key Tech Inflection Point
    Research for Institutional Money Management: Advancing Physical Risk Modelling,…
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    October 23, 2023 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2025. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • CIOs
      • Consultants
      • Defined Contribution
      • ESG
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Private Credit
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • Special Reports
      • Washington
      • White Papers
    • International
      • U.K.
      • Canada
      • Europe
      • Asia
      • Australia - New Zealand
      • Middle East
      • Latin America
      • Africa
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Influential Women in Institutional Investing 2024
      • Eddy Awards
    • Resource Guides
      • Active Thematic Global Equities
      • Retirement Income
      • Fixed Income
      • Pension Risk Transfer
      • Pooled Employer Plans (PEPs)
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • DC Plan Design: Improving Participant Outcomes
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
    • Print