Roiling equity and debt capital markets have yet to close the purse strings of limited partners, as One Equity Partners closes its largest fundraise independent of its previous parent company to date. The capital raise helps illuminate a tale of two markets—one in which funds close on schedule at hard cap, and another in which roadshows stretch and commitments fall short.
Just two months ago, BC Partners fell approximately $2 billion short of expectations for its flagship fund, even as rivals exceeded predictions. Bloomberg News reported the 2-year-long fundraising effort was hobbled by pandemic-related performance of less recent vintages.
While funds are hitting and regularly even exceeding targets, the time spent on the road raising funds is creeping higher, according to data from Preqin. Managers spent 16 months on the road to close funds through the first three quarters of 2021, the highest length, on average, since 2013.
Limited partner sources tell me fatigue is setting in with insistent GPs coming to call as little as 18 months after a prior fundraise.
Is the asset class approaching a saturation point?
Not so in the middle market. Not yet, at least. One Equity Partners VIII closed in 12 months with $2.75 billion in committed capital after the hard cap was raised. Managing director David Lippin attributed the showing to “strong existing investor relationships and many new investors globally.”
It’s a point echoed by debt provider Riverside Credit Solutions after the close of its $280 million fundraise last month—investors were key. Whether relationships or different dynamics in the upper versus middle market explain the varied outcomes, it’s clear that momentum in the asset class can no longer be taken for granted.
–Brandon Zero
