Private Equity Market Drawing Record Funds

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Investments into private equity reached records not seen since 2008 over the course of 2015, new research by investment advisory organisation Triago has found.

Over the first three quarters of 2015, investments into private equity funds hit $364 billion, with a record $468 billion expected by the end of the year – the highest amount recorded in eight years.

Investors were pumping money into side deals – those which have been struck with funds to directly invest or co-invest in deals – with $121 billion so far this year injected into such transactions. These deals – which include co-investments, investments into separate accounts and direct investments – are tipped to reach $161 billion by the end of the year.

When investments into traditional funds are married with investments into side deals, the total private equity market looks set to draw in $629 billion this year, according to Triago’s research.

In terms of why the investments into private equity are so high this year, Triago suggests that the net cash returned to investors, giving them funds to re-invest, has something to do with it. Over the course of the first three quarters of 2015 this figure stood at $138 billion, gaining on the 2014 record of $156 billion for the full 12 months.

Another recent study, which was released by iCapital Network, found that private equity investments were also becoming increasingly popular among single-family offices (SFOs), which were opting for the asset class due to their strong performance when compared to other assets.

The report – which was linked to information collected over the course of 2013 and 2014 from 162 single-family offices based in the US, Europe, Asia and South America – found that 62 per cent already invested in private equity. Out of those 62 per cent, 94 per cent used funds and 40 per cent also carried out direct investments.

Lawrence Calcano, managing partner of iCapital Network, told Think Advisor: “In our view, the potential for superior investment returns is the single most influential factor in why private equity is viewed so favorably by single-family office investors these days.”

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