Private Placement Insights as of November 30, 2022

Tuesday, December 13th, 2022 and is filed under Industry Reporting

We recently released our November 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.

• 21 new private placements were added to our coverage in December, a notable decline from the 31 added in October. A big part of this is attributable to the slowdown in 1031 exchange activity, where we were seeing 20+ funds added each month, well above November’s nine new additions. We have also seen fewer conservation funds this year, as anticipated, and even the non-tax focused real estate segment has slowed considerably.
• Based on the increased activity early in the year, new fund coverage is still up 15% year-over-year, and those funds are seeking to raise 87% more capital, on average. The two categories that are down year-over-year are hedge funds and conservation funds, while all others are still above.
• As of December 1st, AI Insight covers 274 private placements currently raising capital, with an aggregate target raise of $41.5 billion and an aggregate reported raise of $21.1 billion or 52% of target.
• Real estate-related funds, including 1031s, Opportunity Zone funds, and non-1031 real estate LLCs, LPs, and private REITs have historically represented the largest component of our private placement coverage. While these funds still represent 71% of our coverage by number of funds, private equity and debt funds now represent a much larger amount of aggregate target raise as we have seen larger funds added here recently. Real estate funds are still 55% of aggregate target, down from 73% last month, while private equity and debt funds are 36% of target, up from 16% last month. Private equity’s share of the target is also likely much higher, as there are 13 funds that do not report a target or a 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 61% of funds, while growth and growth & income follow at 21% and 18%, respectively.
• The average size of funds currently raising capital is $151.4 million, up from $120.1 million last month primarily due to the large private equity fund added in November. Funds range in size from $1.2 million for a specified 1031 exchange fund to the $9.7 billion target of the recently added private equity fund.
• 74% of private placements we cover use the 506(b) exemption, 17% use 506(c) and 9% have not yet filed their Form D with the SEC.
• Twelve private placements closed to new investors in October and 234 have closed year-to-date. Funds that closed this year have been on the market for an average of 383 days and the 219 funds reporting raised 86% of target on average.
• According to Pitchbook, overall private markets fundraising is down 7.6% year-over-year as of the end of the third quarter of this year. The steepest declines were seen in fund-of-funds, secondaries, and real estate-focused funds. Pitchbook also reports that firms may be extending offering periods to bridge into 2023, as portfolios are well over-allocated based on 2022 budgets. The largest funds, or those seeking to raise over $1 billion, took in 73% of assets.

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

 

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Chart and data as of November 30, 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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