The Highs and Lows of Private Equity Funds

The COVID-19 pandemic has affected the private equity sector in more ways than one.  Presently, there are a record number of private equity funds.  However, funds are being raised at a slower pace and therefore slowing down the closing process.  Is this purely due to COVID concerns, or that CRE investors are taking a smarter, more thoughtful approach to engaging sponsors?

Recent data from Prequin uncovered a total of 237 private equity funds (in all sectors) closed in the third quarter.  That’s the lowest quarterly total since 2015.  On the flipside, 3,968 are seeking capital—a record number of funds since 2015. 

The investor to asset manager relationship needs to be strengthened– and greater, dynamic transparency using both cloud-based technology and as always, acute and experienced talent is critical.

As cited elsewhere, my phone has been ringing a lot lately with requests for capital raising specialists.  As always, at Ice Breaker Resources, we work with great care to design a search plan for an institutional investor quite differently from a family office or highly entrepreneurial PE CRE investor.

To my earlier point, I am now advising further caution that robust investment-side portfolio management and asset controls are established prior to embarking on a capital raising hire/search or fundraise.  Occasionally, one might identify an “all-rounder” that can temporarily perform these functions.  However, in essence, it’s two separate hires…sooner or later.

The real estate firms that have placed the advance planning and infrastructure into their fundraising program will be rewarded.  The “knee jerk” plays we are seeing will not.

When you’re looking to take your fundraising efforts to the next level, the team at IBR is here to assist in whiteboarding, planning, and ultimately, execution. Reach out.