Private Placement Industry Insights as of October 31, 2023

Monday, November 13th, 2023 and is filed under Industry Reporting

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

• Seventeen new private placements were added to investment product training in October, continuing an uptrend from the low 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. Despite growth in energy, hedge funds, and preferred offerings, overall new fund activity on the platform is well below last year. On a year-to-date basis 38% fewer funds have been added and those that have been added are seeking to raise 58% less capital.
• While activity has slowed, we have seen continued additions of funds providing access to private equity and hedge fund strategies that were either previously not available to individual investors or available to investors overseas. These feeder or access funds adding education is a positive sign for the private markets industry – investors who make informed decisions stay invested longer. Additionally, we continue to see new sponsors adding education for their funds, including two new sponsors added this month and four last month.
• As of November 1st, AI Insight by iCapital covers 286 private placements currently raising capital, with an aggregate target raise of $49 billion and an aggregate reported raise of $31 billion or 63% of target.
• The average size of funds currently raising capital is $172 million. Funds range in size from $3.8 million for a real estate property improvement fund to a recently increased $13.6 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 69% of the total number of funds, and 49% of aggregate target. The percentage of target is down significantly as larger private equity and hedge funds have been added along with the slowdown real estate. 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 55% of funds, while growth and growth and income follow at 23% and 19%, respectively.
• 61% of private placements we cover use the 506(b) exemption, 31% use 506(c) and 8% have not yet filed their Form D with the SEC.
• Twenty-six private placements closed to new investors in October and 154 have closed year-to-date. The 129 funds that reported a raise at close were on the market for an average of 318 days and raised 91% 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 October 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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