Private Placement Industry Insights as of January 31, 2023

Friday, February 10th, 2023 and is filed under Industry Reporting

We recently released our January 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.

• 15 new private placements added investment product education in January, well below the 27 in December and more than 21% below January of 2022. Funds added are also seeking to raise 29% less capital on a year-over-year basis.
• 1031 exchange activity is notably slower, as anticipated, given the uncertainty in the real estate markets and higher debt costs. Real estate volume overall slowed in 2022 (-27% as of the end of Q3) and CBRE forecasts volume to slow another 15% in 2023, which directly impacts the 1031 exchange market. Interestingly, the non-tax-focused real estate segment increased in January, with three housing-focused funds added and several value-added and opportunistic funds added recently as well. CBRE also reports that while volumes are forecast to come down, investors indicated they will likely continue to invest in multifamily, opportunistic, and real estate debt in 2023.
• As of February 1st, AI Insight by iCapital covers 263 private placements currently raising capital, with an aggregate target raise of $42.3 billion and an aggregate reported raise of $21.2 billion or 50% of target.
• Real estate-related funds, including 1031s, Opportunity Zone funds, and non-1031 real estate LLCs, LPs, and private REITs represent 75% of the total number of funds, and 55% of aggregate target. The percentage of target is down recently as larger private equity funds have been added. Additionally, private equity’s share of the target raise is likely much higher. There are 12 private equity 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 59% of funds, while growth and growth & income follow at 22% and 19%, respectively.
• The average size of funds currently raising capital is $160.7 million, up from $108.0 million last year and continuing a trend towards larger offerings. Funds range in size from $2.6 million for a specified 1031 exchange fund to the $9.7 billion target for a diversified private equity fund.
• 70% of private placements we cover use the 506(b) exemption, 19% use 506(c) and 11% have not yet filed their Form D with the SEC.
• Eighteen private placements closed to new investors in January. The 15 funds that reported a raise were on the market for an average of 270 days and raised 61% 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 January 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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