Private Placement Insights as of August 31, 2022

Wednesday, September 14th, 2022 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 a Premium Reporting subscriber, log in now to see the entire report. If you don’t have access, you can request a free trial.

• 36 new private placements were added to our coverage in August, tying July as another record month. We have added more funds in all categories other than hedge funds this year compared to last, although activity is ramping up in that category with new funds coming soon. Real estate funds still lead in terms of funds added and raise targets. Non-tax-focused real estate LLCs, LPs, and private REITs are up 95% from a year ago and are seeking to raise 514% more. 1031 exchange additions have slowed recently although they are still up year-over-year, while we continue to see steady activity in Opportunity Zone fund additions.
• Overall, on a year-over-year basis, we have added more funds than last year (+31%), and these funds are targeting a larger amount of capital (+111%). We have also added nearly 30 new sponsor relationships across the categories. The increase in volume is indicative of the continued growth in alternative investment options for high-net-worth investors, as well as a focus on education within the space.
• As of September 1st, AI Insight covers 259 private placements currently raising capital, with an aggregate target raise of $31.9 billion and an aggregate reported raise of $10.4 billion or 34% of target.
• Real estate-related funds, including 1031s, Opportunity Zone funds, and non-1031 real estate LLCs, LPs, and private REITs represent the largest component of our private placement coverage at 68% of funds and 70% of target raise. Private equity/debt funds represent 16% of funds and 17% of target raise, although this does include 14 private market feeder funds that do not specify an offering target.
• In terms of coverage by general objective, income is the largest component at 56% of funds, while growth and growth & income follow at 26% and 18%, respectively.
• The average size of funds currently raising capital is $122.8 million (up from $117 million as of the beginning of August), ranging from $3.9 million for a specified Opportunity Zone fund to $2.5 billion for a private REIT focused on single-family housing.
• 73% of private placements we cover use the 506(b) exemption, 16% use 506(c), and 11% have not yet filed their Form D with the SEC.
• Twenty-three private placements closed to new investors in August and 176 have closed year-to-date. Funds that closed this year have been on the market for an average of 285 days and the 145 funds reporting, raised 83% of target on average.
• According to Pitchbook, private market fundraising has flattened since peaking pre-pandemic in 2019. However, first half 2022 levels are still on par with 2021, with the difference being fewer funds seeking a larger share of the raise. Larger funds continue to gain more share, taking in 33.6% of commitments in 2022 versus 22.1% in 2021. Additionally, successor funds are getting larger, with the median successor fund in private debt 90.3% larger than its predecessor, and median funds in real assets 87.7% larger than their prior funds. These bigger funds hold a larger percentage of dry powder than ever as well, which may translate into more take-private deals as these dollars are put to work and public market valuations have come down. On the flip side, first-time fundraisers have struggled this year, with the amount raised by new managers and the number of first-time funds well below 2021[1].
• Pitchbook also reports that private equity, private debt, and real estate strategies have taken less a share of the raise in the first half of 2022 compared to 2021, while real assets (excluding real estate) and venture capital strategies have taken a larger share[2].

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

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Chart and data as of August 31, 2022, 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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[1] Source: Pitchbook, August 2022

[2] Source: Pitchbook, August 2022