Private Placement Industry Insights as of August 31, 2023

Tuesday, September 19th, 2023 and is filed under Industry Reporting

We recently released our August Private Placement Insights report. See the highlights from the report below, or if you are an AI Insight subscriber, log in now to see the entire report.

• Fifteen new private placements added investment product training in August, a slight pickup from the 12 added in July but still well below the 25-30 per month regular pace. Most of the slowdown is due to continued weakness in the real estate segment, a historically large component of the platform. 1031 exchange activity remains stagnant and even the smaller private real estate deals have slowed. Transaction volume in the real estate markets was down 54% year-over-year in Q2 and while there is some indication that leasing velocity ticked up in July and August, buyers and sellers are still not on the same page. Until the real estate markets see a marked improvement in transaction volume, we would expect to see fewer funds formed and added to the platform. Despite growth in energy and hedge funds, overall new fund activity on the platform is well below last year. On a year-to-date basis 37% fewer funds have been added and those that have been added are seeking to raise 61% less capital.
• As of September 1st, AI Insight by iCapital covers 293 private placements currently raising capital, with an aggregate target raise of $50 billion and an aggregate reported raise of $29 billion or 58% of target. The aggregate target is $20 billion below last month, due to the closing of a large private equity fund.
• The average size of funds currently raising capital is $170 million. Funds range in size from $2.6 million for a specified 1031 exchange to a recently increased $13 billion AUM for a diversified private equity and debt fund.
• Real estate-related funds, including 1031s, Opportunity Zone funds, and non-1031 real estate LLCs, LPs, and private REITs represent 72% of the total number of funds, and 54% of aggregate target. The percentage of target is down significantly as larger private equity and hedge funds have been added along with the slowdown in 1031 exchange activity. Additionally, private equity’s share of the target raise is likely much higher because, despite the closing of the large private equity fund, there are 12 funds that do not report a target or capital raise, as they are seeking instead to raise a percentage of a larger, institutional fund rather than a specific dollar amount.
• In terms of coverage by general objective, income has been and remains the largest component at 58% of funds, while growth and growth and income follow at 22% and 18%, respectively.
• 63% of private placements we cover use the 506(b) exemption, 28% use 506(c) and 9% have not yet filed their Form D with the SEC.
• Twenty private placements closed to new investors in August and 113 have closed year-to-date. The 94 funds that reported a raise at close were on the market for an average of 297 days and raised 98% of target on average.

For illustrative purposes only. Past performance is not indicative of future results.

 

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Chart and data as of August 31, 2023, based on programs activated on the AI Insight platform as of this date.

Activated means the program and education module are live on the AI Insight platform. Subscribers can view and download data for the program and access the respective education module.

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