Jan 1st 2022 to May 2023
Disclaimer
This report is prepared by AIP (Adamant Investment Partners) for informational purposes only. The content provided herein does not constitute investment, financial, legal, or tax advice, and should not be used as the basis for any investment decisions. The information presented in this report is not intended as a comprehensive analysis or an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.
The information in this report is either publicly available or has been provided to AIP non-confidentially such as through online forms and questionnaires. While efforts have been made to ensure the accuracy of the information, AIP does not guarantee the completeness, timeliness, or reliability of the data. Not all information was available for all funds studied, and as such, the data is not exhaustive.
It is important for investors to consider their own individual circumstances and objectives before making any investment decisions. Investors should seek independent professional advice where appropriate and should not rely on this document to make decisions. Any decisions based on the information contained in this report are the sole responsibility of the recipient.
The views expressed in this report reflect those of the authors and not necessarily those of AIP or its affiliates. AIP will not accept any liability for any loss or damage arising directly or indirectly from the use of, or reliance on, the information contained in this report.
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Forward by Antony Sommerfeld
Welcome to AIP’s report on funding patterns in the venture capital and private equity fund space. Navigating the ever-changing terrain of investment markets necessitates a nuanced understanding of investment funds, an understanding which is vital for both General Partners and Limited Partners alike.
To help you traverse this landscape, our analysis dissects the complex and diverse arena of sector focus, covering areas including Business Services, Consumer Discretionary, Diversified Focus, Energy & Utilities, Financial Services, Information Technology, Healthcare, Industrials, Natural Resources, Real Estate, and Telecoms and Media.
Our research spans across 651 unique investment vehicles managed by 562 fund parents, highlighting the dynamics of fund managers who operate multiple vehicles in the market. For a perspective on the funding patterns of successful funds during this period, we have studied 109 funds that have fully closed out of a total of 298 which reached their first or final close by May 2023.
A special focus of our report is the journey of 144 first-time funds launched during this period, with a further drill-down into the key elements that led to the successful closure of these debut funds.
Our report goes beyond scratching the surface, delving into varied investment strategies including Balanced, Buyout, Co-investment, Direct Lending, Fund of Funds, Growth, Hybrid, Infrastructure, Mezzanine, Natural Resources and Real Assets, Real Estate, Secondaries, Special Situations, Turnaround, and Venture Capital.
The depth of our analysis takes into account a wide array of fund-specific data, encompassing aspects such as primary region investment focus, fundraising status, fund size, fund lifespan, target IRR, fund currency, first close target, fund close target, hard caps, months to first close, months in the market, management fees during and post-investment period, length of the investment period, carried interest, hurdle rate, fund formation costs, GP commitments, geographic focus, and the location of fund headquarters.
In essence, this report aspires to provide you with a robust examination of the current investment fund landscape, delivering valuable insights into the strategic decisions and trends shaping this dynamic market environment.
General Market Overview
This General Market overview provides a detailed analysis of investment funds which commenced their capital raising activities on or after 1st January 2022. We have explored 651 unique investment vehicles steered by 562 fund parents, and found 89 fund managers operating multiple vehicles in the market.
Our analysis was honed by excluding certain types of funds such as evergreen funds, listed funds, open-ended funds, and liquidated funds. Consequently, we focused on a precise group of 635 funds, which began their fundraising activities within our defined time period. It’s important to note that while our research is comprehensive, it does not encompass all funds in the market during this time.
In terms of findings, Venture Capital emerged as the most prevalent investment strategy, capturing 45.98% of the market. Growth and Buyout strategies followed, accounting for 13.07% and 12.76% respectively. Geographically, Europe, Asia, and North America dominated, accounting for 34.33%, 24.41%, and 20.16% of the focus, respectively. In the fundraising realm, 49.76% of the funds were in the ‘Raising’ stage. Other significant portions had reached their ‘First close’ (22.52%) or were already ‘Closed’ (17.17%).
Fund sizes exhibited broad diversity, with an average size of $588.79 million and a median of $133.33 million. The average lifespan of a fund was 9.35 years, varying between 1 and 30 years. The US Dollar and Euro were the preferred fund currencies, accounting for 35.75% and 28.35% respectively. On average, funds took four months to reach their first close and spent about eight months in the market until closed or cancelled.
In terms of industries, Diversified, Information Technology, and Energy & Utilities were the primary foci, representing 40.31%, 23.15%, and 14.17% of the market respectively. The average management fees stood at 1.87% during the investment period and slightly increased to 1.93% post-investment. Average carried interest was pegged at 18.14% while the hurdle rate averaged at 9.50%.
The average fund formation cost was about $710k, and the average General Partner commitment to the fund was 3.91% of the total fund. Europe emerged as the leading region for fund headquarters, hosting 42.36% of them, followed by Asia and North America with 22.99% and 18.43% respectively.
Funds open and closed since January 1st 2022
Below, we present our analysis and key findings on 109 investment funds that have successfully opened and fully closed their funding rounds between January 1, 2022, and May 2023. Our comprehensive study seeks to shed light on their strategic preferences, geographic distribution, fund size, lifespan, currency denomination, target sizes, time in market, industry focus, management fees, carried interest, hurdle rates, fund formation costs, and general partner commitments. These findings provide crucial insights into the prevailing trends in the investment funds landscape during this period.
Investment Strategy Distribution
Venture Capital represents the most common strategy, accounting for 48.62% of all strategies. Buyout and Growth strategies follow, accounting for 14.68% and 11.93% respectively. The remaining strategies each account for less than 10% of the total.
Geographic Focus
The primary region focus for these funds is quite diversified. Europe and Asia each account for 28.44% and 23.85% respectively, and North America represents another 23.85%. The Americas region represents 9.17%, and Middle East & Israel make up 7.34%. Australasia and Diversified Multi- Regional funds each account for less than 10% of the total.
Fund Currency
The majority of funds are denominated in USD (36.70%, followed by EUR (22.94%, and JPY (16.51%. The remaining currencies such as GBP each account for less than 10% of the total.
Fund Size Targets
The target range for fund size varies from $0.80 million to $8.33 billion. The average target size is $758.29 million, and the median target size is $175 million.
First Close Targets
The target range for the first close varies from $138 million to $1 billion. The average target for the first close is $750.2 million, and the median target is $670.13 million.
Hard Cap
The hard cap range for the funds ranges from a micro $5.49 million through to $9.4 billion. The average hard cap is $1.5 billion, and the median hard cap is $678.99 million.
Months to First Close and Months in Market
The range for months to first close is from 2 to 10 months, with an average of 3 months and a median of 2 months. Funds studied have been in the market for a range of 1 to 15 months, with an average and median of 4 and 2 months respectively.
Fund Size
The range of fund sizes is vast, from $200k to $8.75 billion. The average fund size is $456.92 million, and the median fund size is $70 million.
Fund Life Span
The fund life span ranges from 1 to 25 years, with an average life span of 8.48 years and a median life span of 10 years.
Core Industries
The funds are highly diversified across industries. Information Technology and Diversified are the two largest categories, accounting for 26.61% and 44.95% respectively. The remaining industries each account for less than 10% of the total.
Management Fees and Investment Period
The management fee during the investment period ranges from 2% to 2.3%, with an average and median of 2.03% and 2% respectively. The investment period ranges from 3 to 5 years, with an average of 4.5 years and a median of 5 years. The management fee post-investment period has the same range, average, and median as the management fee during the investment period.
Carried Interest and Hurdle Rate
The carried interest percentage range is from 10% (typically SPVs) to 20%, with an average of 14.28% and a median of 10%. 20% should be considered the reflective carried interest percentage. The hurdle rate ranges from 5% to 8%, with an average of 7.25% and a median of 8%.
Fund Formation Costs
The fund formation costs range up to $750k, with both the average and median costs at $750k.
GP Commitments to Fund
The range of GP commitments to the fund as a percentage of total funds targeted ranges from 0% to 2.5%, with both the average and median at 2.5%.
Headquarters Region
Asia, Europe, and North America are the three most common regions for fund headquarters, each accounting for around a quarter of the total. The remaining regions each account for less than 15% of the total.
First Time Funds
Since January 1st, 2022, an analysis of 144 first-time funds in the market shows a diverse array of strategies, fundraising statuses, region focuses, and sectors. By strategy, Early-Stage Venture Capital dominates with 36.8%, followed by General Venture (typically beyond seed stage) at 27.1%, and Growth at 11.1%. Other strategies like Buyout, Expansion/Late-Stage Venture, and Fund of Funds each constitute 2.8%, with the remainder distributed among other categories. In terms of fundraising status, most of these funds are still in the Raising phase (54.9%), while some have achieved their First Close (23.6%). Regarding their regional focus, the majority are concentrated in Asia (31.3%) and Europe (30.6%), followed by North America at 15.3%. Lastly, sector-wise, Information Technology (30.6%) and Diversified (27.8%) sectors host the majority of these funds, with Energy & Utilities (12.5%) and Healthcare (7.6%) also featuring prominently.
First time funds that have successfully reached First or Final Close since January 1st 2022
Overview
Equity classes lead, constituting 55% and 30% of the funds respectively. Infrastructure holds the third spot with an 8.33% share. The remaining fund asset classes – Real Estate, Private Debt, Natural Resources, and Multi- category – each account for 1.67% of the total funds.
Strategy
In terms of strategic focus, Early-Stage Venture seems to be the most preferred, constituting 31.67% of the total funds. General Venture and Growth strategies are also significant, accounting for 21.67% and 18.33% respectively. Other strategies such as Inf rastructure (8.33%), Fund of Funds (5%), and Buyout (3.33%) form a smaller proportion of the total funds. A minimal representation is seen in strategies like Expansion/Late-Stage Venture, Mezzanine, Natural Resources, Real Estate, Secondaries, Special Situations, and Turnaround, each contributing 1.67%.
This part of our report delves into the detailed review of 60 funds that began their capital raising journey on or after January 1st 2022 and successfully reached either a first or final close by May 2023. It provides insights on an array of factors including the distribution of funds by asset class, investment strategy, industry focus, primary region of investment, and fundraising status. Additionally, it reviews the funds’ lifespans, target internal rates of return (IRR), target fund sizes, hard cap sizes, management fees, and several other key parameters.
Fundraising Status
A majority of the funds, 56.67%, have reached their First Close. This is followed by funds that are fully closed, which constitute 30%. The remaining funds are either at their Second Close (11.67%) or Third Close (1.67%).
Fund Asset Class
The funds analysed in the study are categorized into various asset classes. Predominantly, Venture Capital and Private
Industry Focus
Funds with a diversified industry focus make up the majority at 35%, followed closely by those targeting the Information Technology sector at 31.67%. Energy & Utilities follows with a 13.33% representation. The industries of Business Services, Consumer Discretionary, Financial & Insurance Services, Healthcare, Raw Materials & Natural Resources, and Real Estate each attract 3.33% of the funds.
Primary Region of Investment Focus
Asia and Europe equally attract the attention of 30% of the funds. North America follows with a 20% representation. Middle East & Israel and Multi-Regional each constitute 6.67% of the funds. The Americas and Australasia are the least represented, with each making up 3.33% of the funds.
Fund Life Span
Fund lifespans range from 2 to 12 years with an average lifespan of 7.64 years and a median lifespan of 8 years. We believe 2- year fund to be a SPAV.
Minimum IRR targets
The target minimum IRR expressed to LPs ranges from 7% to 25% with an average IRR of 15.58% and a median IRR of 15%.
Fund Size
The target fund size varies greatly, ranging from $10 million to $832.89 million. The average fund target size stands at $176.56 million, with a median of $83.29 million.
Hard Cap
The hard cap size ranges from $20 million to $600 million, with an average of $163.23 million and a median of $148.39 million.
Fund Timelines
The time taken from inception to first close averages at 3 months, with a median of 2 months. The ranges are between 1 to 12 months. In terms of time spent in the market, the average is 9 months, with a median of 10.5 months. The range is between 1 to 16 months.
Fund Fees and Investment Period
Management fees during the investment period vary between 1% to 2%, averaging at 1.75%, and a median fee of 2%. The duration of the investment period ranges from 4 to 5 years, with an average of 4.67 years and a median of 5 years. Post investment, the management fee was consistently 2%.
Carried Interest
Carried interest across the funds ranges from 5% to 20%, with an average of 16.25% and a median of 20%.
Hurdle Rate
The hurdle rate ranges from 7% to 8%, with an average of 7.75% and a median of 8%.
GP Commitments
The General Partner commitments consistently stand at 2.5% of the fund targeted.
Fund Patterns by Sector
Business Service Funds
Business Services funds are primarily deploying Expansion/Late-Stage strategies, which constitutes 28.57% of the total strategies. Early Stage and Growth strategies are also fairly common, each making up 14.29% of the strategies. Other strategies like Balanced, Buyout, Early Stage Start Up, Fund of Funds, Secondaries, and Venture (General) are each employed by 7.14% of the funds.
The primary regional focus of these funds is Europe, which constitutes a majority of 57.14%. Asia and North America follow, each representing 14.29% of the total focus. The Americas and Diversified Multi-Regional areas both account for 7.14%.
In terms of fundraising status, 35.71% of the funds are in the ‘Closed’ and ‘Raising’ stages respectively. First Close has been reached by 14.29% of the funds while ‘Announced’ and ‘Second Close’ stages each account for 7.14% of the funds.
Fund sizes in this category range from $320k to $400 million. The average fund size is approximately $71.38 million, and the median fund size is $31.23 million.
Time to first close varies between 4 and 11 months, with an average of 2 months. As regards duration of time in market, funds typically stay for an average of 4 months, ranging from 1 to 14 months, with a median of 1 month.
The management fee during and post-investment period averages at 2%, which is also the median. Carried interest ranges between 10% and 20%, with an average of 18% and a median of 10%.
With regards to the headquarters location, Europe leads with 57.14%, followed by North America (21.43%) and Asia (14.29%). Latin America & Caribbean accounts for 7.14% of the total headquarters locations.
Consumer Discretionary Funds
Consumer Discretionary funds employ a variety of investment strategies. The most common strategy is General Venture Capital which makes up 32.14% of the strategies used, followed by Early-Stage VC at 21.43%. Other notable strategies include Buyout and Growth which constitute 17.86% and 14.29% respectively. Early Stage / Start Up funds represent 7.14% while Expansion / Late Stage and Mezzanine each account for 3.57%.
The primary geographical focus of these funds is on Asia, with 35.71% of funds focusing on this region. Europe and the Middle East & Israel are also significant regions of focus, each with 21.43%. North America follows with 14.29%, while the Americas and Australasia each account for 3.57%.
With regards to fundraising status, a majority of the funds are in the Raising stage, comprising 64.29% of the total. Following this, 17.86% of the funds are ‘Closed’, while 7.14% have reached their ‘First Close’ or ‘Second Close’. Only 3.57% have reached their ‘Third Close’.
Fund sizes vary widely, ranging from $320k to $500 million. The average fund size is approximately $137.13 million, with a median of $75 million. The lifespan of these funds ranges from 5 to 10 years, with an average lifespan of 8.11 years and a median of 8 years.
For the first close, targets range between $520k and $290.32 million, with an average close target of $149 million and a median of $156.17 million. The hard cap ranges from $121.36 million to $290.32 million, with an average hard cap of $192.75 million and a median of $166.58 million.
On average, it takes 3 months to reach the first close, with a range of 1 to 7 months. The funds stay in the market for an average of 6 months, ranging from 1 to 16 months, with a median of 5 months.
As for the location of headquarters, the majority of the funds are based in Asia (42.86%). Europe accounts for 21.43% of the headquarters, followed by North America at 14.29%, and the Middle East at 7.14%.
Diversified Funds
Diversified funds incorporate a wide array of investment strategies. The most prominent strategies include Buyout (23.05%), Growth (16.80%), Venture (General) (16.02%), and Fund of Funds (12.11%). Other strategies like Early Stage, Co-Investment, Secondaries, and a few others account for less than 3% each.
The geographic focus of these funds is mainly on Europe, constituting 34.38% of the total, followed by Asia (23.83%), and North America (20.31%). Other regions such as the Americas, Africa, Australasia, and Middle East & Israel account for a smaller portion of the focus.
In terms of fundraising status, a majority of the funds are in the Raising stage (43.75%), followed by those at First Close (26.17%), and Closed (19.14%). The remaining stages account for less than 3% each.
The fund size for these diversified funds ranges extensively, from as small as $200k to as large as $20 billion. On average, the fund size is around $625.6 million, with a median of $145.54 million. The lifespan of these funds also varies considerably, ranging from 1 to 30 years, with an average lifespan of 9.67 years and a median of 10 years.
For the first close, the target range is between $5.03 million and $10.411 billion, with an average close target of $824.82 million and a median of $268.05 million. The average hard cap is approximately $766.04 million. The average time to first close is 4 months, ranging between 2 to 19 months, while funds stay in the market for an average of 8 months.
Management fees during the investment period range from 0 to 2.4%, averaging at 1.73% with a median of 2%. The investment period typically lasts between 1 (SPV) to 5 years, with both the average and median at 4 years. Post-investment, the management fee ranges from 1 to 2%, averaging at 1.84% with a median of 2%.
Carried interest rates range from 0 to 30%, with an average of 17.69% and a median of 20%. The hurdle rate ranges from 6 to 30%, with an average of 9.58% and a median of 8%.
Fund formation costs vary from $100k to $2.5 million, averaging at $960k with a median of $1 million. GP commitments to the fund range from 1 to 5% of the total, with an average of 2.63% and a median of 2%.
The majority of funds studied are headquartered in Europe (42.58%), followed by Asia (22.27%) and North America (16.80%). Other regions hosting headquarters include Latin America & Caribbean, Middle East, Australasia, and Africa, which has the fewest headquarters, representing 1.56% of the total.
Information Technology (Including AI/ML) Funds
The information technology funds, which include AI/ML funds, are primarily focused on Venture Capital strategies, making up 83.67% of the total. Other strategies include Growth (9.52%), Buyout (2.72%), and Fund of Funds (4.08%). Asia attracts the largest portion of the investment focus, accounting for 32.65%. Europe and North America also hold significant interest, with 23.81% and 21.77% respectively. Other regions including Africa, Americas, Australasia, Diversified Multi-Regional, and the Middle East & Israel constitute the remainder.
Most funds are in the Raising stage (50.34%), followed by Closed funds (19.73%) and those at First Close (18.37%). The other stages are Announced, Second Close, Third Close, Fourth Close, and Estimated. Fund sizes span a wide range from $1.70 million to a hefty $4 billion. The average fund size is $186.43 million, with a median of $95 million. The lifespan of the funds varies between 3 to 10 years, averaging at 7.65 years, with a median of 8 years.
The target fund size averages $150.79 million with a median of $87.83 million. The target for the first close ranges from $20 million to $548.91 million, averaging at $187.69 million with a median of $109.78 million. Hard caps average $200.65 million with a median of $100 million.
On average, it takes 4 months to reach the first close, and funds stay in the market for an average of 7 months. The management fee during and post the investment period ranges from 1% to 2.50%, averaging at 1.97%. The investment period ranges from 3 to 5 years, averaging at 4.25 years. Carried interest rates range from 20% to 25%, with an average of 20.625%. The hurdle rate is between 5% and 10%, averaging at 7.625%.
Fund formation costs vary f rom $30k to $750k, with an average cost of $250k. GP commitments to the fund range from 1% to 3% of the total, averaging at 1.67%. The largest proportion of fund headquarters are located in Europe (31.29%), followed by Asia (30.61%) and North America (21.09%). Other headquarters are spread across Africa, Australasia, Latin America & Caribbean, and the Middle East.
Healthcare Funds
The majority of the healthcare funds studied focus their investment strategies on Venture Capital, accounting for 67.39%. Buyout and Growth each account for 15.22%, while Fund of Funds constitutes 2.17%. The primary geographical focus is Asia, representing 34.78% of the total, closely followed by Europe (30.43%) and North America (15.22%). The remaining regions are Africa, Australasia, Diversified Multi-Regional, and the Middle East & Israel.
About 47.83% of the funds are in the Raising stage, 23.91% have had their First Close, and 15.22% are Closed. The remainder are either Announced or at the Second Close stage. Fund sizes vary significantly, ranging from $14.95 million to a whopping $10 billion, with an average fund size of $542.6 million and a median of $131.74 million. Fund lifespans span from 3 to 10 years, averaging at 8.76 years, with a median of 10 years.
The target fund size echoes the actual fund size range, with an average target of $508.67 million and a median of $131.74 million. The first close target range is from $74.05 million to $700 million, with an average target of $318.27 million and a median of $219.57 million. Hard caps average $373.62 million, with a median of $88.86 million. It typically takes 5 months to reach the first close, and funds stay in the market for an average of 8 months.
Management fees during the investment period range from 1.7% to 2.5%, averaging at 2.033%, and post-investment period, they hover around 2%. The investment period lasts between 3 to 5 years, averaging at 4.167 years. Carried interest rates range from 0% to 20%, averaging at 20%, and the hurdle rate varies from 6% to 30%, averaging at 12.375%. Fund formation costs span from $150k to $750k, with an average cost of $0.35 million. GP commitments to the fund range from 0% to 0.15% of the total. The largest portion of headquarters are in Europe (41.30%), followed by Asia (30.43%) and North America (17.39%).
Industrial Funds
The industrial funds studied primarily use Venture Capital as their investment strategy, which constitutes 45.45% of the total. Other strategies include Buyout, Growth, and Infrastructure, each accounting for 18.18%. In terms of geographic focus, Europe and North America dominate, each accounting for 36.36% of the funds, followed by Middle East & Israel (18.18%) and Diversified Multi-Regional (9.09%).
A majority of these funds are in the Raising stage, making up 63.64% of the total. Those that have reached their First Close constitute 18.18%, while Announced and Closed funds each represent 9.09%. The fund sizes range from $50 million to $175.65 million, with an average of $120.12 million and a median of $100 million. Fund lifespans span from 5 to 8 years, averaging at 6.5 years, with a median of 5 years.
Fund size targets echo the actual fund sizes, ranging from $50 million to $175.65 million, with an average target size of $113.06 million and a median of $100 million. The average target for the first close is $269.57 million, with a median of $100 million. On average, it takes 4 months to reach the first close, ranging from 3 to 5 months. The median time to the first close is 3 months.
Funds remain in the market for an average of 8 months, ranging from 7 to 15 months. The median time in the market is 10 months. Over half of the fund headquarters are in Europe, constituting 54.55% of the total. This is followed by North America (27.27%), with Asia and the Middle East each accounting for 9.09%.
Natural Resources Funds
The Natural Resources and Real Assets funds in our study make up 80% of the total. Venture Capital and Growth strategies account for 16% and 4% respectively. The primary geographic focus is Europe and North America, each at 28%, followed by Asia (20%), Australasia (12%), Diversified Multi-Regional (8%), and Americas (4%).
In terms of fundraising status, the majority of funds are still in the Raising stage (76%). 12% have reached their First Close, 8% are Closed, and 4% are Announced. The funds’ sizes vary widely, from $550k to $2 billion, with an average of $379.72 million and a median of $219.57 million. The funds’ lifespans also vary, ranging from 7 to 20 years, with an average of 12 years and a median of 10 years.
The target fund sizes are similar to the actual sizes, ranging from $550k to $2 billion, with an average target size of $393.32 million and a median of $219.57 million. Hard caps range from $300 million to $2 billion, with an average of $916.3 million and a median of $548.91 million.
It takes, on average, 3 months for natural resources funds to reach their first close, with a range of 1 to 6 months. The average and median times in the market are both 9 months, with a range of 1 to 16 months. Finally, Europe is the most common location for the funds’ headquarters (36%), followed by North America (32%), Asia (16%), Australasia (8%), and Africa and Latin America & Caribbean, each at 4%.
Real Estate Funds
The real estate funds in our study adopt a predominantly Real Estate investment strategy, accounting for 60% of the total. The remaining 40% is equally split between Growth and Venture Capital strategies. Geographically, the funds are evenly spread across Asia, Australasia, Europe, Middle East & Israel, and North America.
In terms of fundraising status, 40% of the funds are in the Closed stage, another 40% are Raising, and 20% have reached their First Close. Fund sizes range from $100 million to $340 million, with an average of $182.82 million and a median of $108.96 million. All funds have a lifespan of up to 5 years.
The target fund sizes range from $100 million to $339.49 million, with an average target size of $219.75 million and a median of $100 million. The hard cap for these funds is up to $125 million, averaging at $125 million.
On average, the funds reach their first close in 1-2 months and stay in the market for about 6 months, ranging up to 12 months. Finally, the headquarters for these funds are equally distributed across Asia, Australasia, Europe, Middle East, and North America.
Telecoms and Media Funds
Our study analysed a sole telecom and media fund that was launched post-January 1st, 2022. The fund is based in Asia, focusing 100% of its investments in this region. It adopts a Venture Capital investment strategy for its entire portfolio.
Currently, it’s in the Raising stage, with a targeted fund size of $60 million. This fund has been active in the market for a total of 9 months, illustrating its relatively recent entry into the market.
Fund Patterns By Strategy
In our study, a total of 298 funds were examined, covering an extensive period from their first close to the ultimate final close. The investment strategies encapsulated a broad spectrum of financial approaches. These included Balanced, Buyout, Co-investment, Direct Lending, Fund of Funds, Growth, Hybrid, Infrastructure, Mezzanine, Natural Resources and Real Assets, Real Estate, Secondaries, Special Situations, Turnaround, and Venture Capital.
Balanced Funds
Our study examined two balanced funds, each primarily focused on different regions: the Americas and Asia, each making up 50% of the regional focus.
The size of the funds was $63.37 million and $92.21 million, averaging $77.79 million. Both funds have a lifespan of 7 years. The hard cap for these funds ranges up to $95.05 million, with an average hard cap of $47.52 million.
The time taken to reach the first close for these funds is between 1 to 5 months, with an average of 2.5 months. The funds have been in the market for a period ranging from 6 to 13 months, with an average of 10 months.
As for industry focus, both funds are diversified, indicating investments across various sectors.
In terms of headquarter location, one fund is headquartered in North America and the other in Asia, each accounting for 50% of the headquarters region.
Buyout Funds
The study explored 36 buyout funds, predominantly located in Europe, which constitutes the primary regional focus for 50% of the funds. Asia and North America also have notable representation at 19.44% and 16.67% respectively. Other regions make up smaller percentages.
Fund sizes range from $4.34 million to a significant $8.75 Billion. On average, these funds stand at $1175.68 million, with a median size of $439.13 million. The lifespan of the funds shows a wide range between 3 and 25 years, with an average lifespan of 9.83 years.
The target fund sizes span from $20 million to $8328.92 million, presenting an average target size of $1.24 billion. The range for the first close target falls between $156.17 million and $1.1 billion, averaging at $633.01 million.
The hard caps of the funds also demonstrate a substantial range, between $20 million to $9.3 billion, with an average hard cap of $1.7 billion.
The time to reach the first close ranges from instantaneous (we presume with investors already lined up) to a period of 12 months, averaging at 5 months. The duration the funds have remained in the market varies between 4 to 16 months, averaging at 7 months.
In terms of industry focus, a large majority, 80.56%, of the funds have a diversified focus, with the remaining spread across various sectors like Information Technology, Healthcare, Consumer Discretionary, Financial Services, and Industrials.
The management fee during and post the investment period averages at 2%, and the carried interest averages at 20%. The hurdle rate averages at 8%, and the investment period for these funds averages at 5 years.
Fund formation costs range from $0 to $2.5 million, averaging at $1.25 million. GP commitments to the fund as a percentage of total range from 0% to 2% with an average of 1%.
In terms of headquarter location, the majority of the funds are based in Europe (52.78%) and Asia (22.22%), with other regions making up the rest.
Co-investment Funds
The study focused on seven co-investment funds. The majority of these funds, around 57.14%, primarily focus on Europe, while North America and Asia make up 28.57% and 14.29% of the primary regional focus, respectively.
Fund sizes vary significantly, ranging from $2 million to $458 million. The average fund size lands at about $135.24 million, with a median size of $87 million. The lifespans of these funds show a range of 5 to 8 years, averaging at 6.5 years with a median lifespan of 5 years.
Fund size targets echo the actual sizes, with the same range of $2 million to $458.10 million, and an increased average of $165.24 million. Interestingly, the first close targets fluctuate between $0 and a whopping $416.45 million, providing an average of $208.22 million.
Time to the first close ranges f rom immediate to a span of 10 months, averaging at 4 months. These funds have typically remained in the
market between 2 and 16 months, with an average duration of 11 months.
In terms of industry, all funds showcased a diversified focus. This diversity also resonates in their locations, with a majority, 71.43%, having their headquarters in Europe, and the remaining spread between Asia and the Middle East, both at 14.29%.
Direct Lending Funds
We analysed one direct lending fund, which primarily focuses on the Asian region. The fund operates with a lifespan of 5 years. A noteworthy feature of this fund is its target size and hard cap, both of which are set at $370 million.
In terms of the fund’s activities, it took 6 months for it to reach its first close and it has been active in the market for a total of 16 months. As for its investment strategy, the fund has adopted a diversified focus across various industries, rather than concentrating on a specific sector. The investment period is set for 3 years, demonstrating the timeframe for its commitment to new investments. Finally, the fund’s headquarters are located in Asia, corresponding with its primary geographic focus.
Fund of Funds
Our study included 23 fund of funds with varied geographic focus. The regional focus distribution for these funds is as follows: Europe (56.52%), North America and Asia (both at 17.39%), and Diversified Multi- Regional (8.70%).
The size of the funds had a wide range from $19.63 million to a staggering $7.5 billion. The average fund size was approximately $833.83 million, with a median of $120 million.
These funds had life spans ranging from 3 to 15 years, averaging at 8.75 years. The median lifespan was 10 years.
The target sizes for these funds ranged from $20.37 million to $7.5 billion, with the average target size around $748.19 million. The median target size was considerably lower at $109.78 million.
The range for the first close target for the funds was from $109.78 million to $1.2 billion million, with an average target of $431.59 million. The median first close target was $166.58 million.
In terms of time to first close, these funds ranged from 0 to 10 months, averaging at 3-4 months and with a median of just 1 month. On average, these funds were in the market for 6 months, with durations ranging from 0 to 16 months. The median time spent in the market was 5 months.
The funds spread their focus across different industries, with a significant majority (73.91%) having a diversified industry focus. Information Technology (21.74%) and Business Services (4.35%) were also focal points. The investment period for these funds is approximately 3 years.
The range for carried interest was between 0 and 5%, with an average of 2.5%. The hurdle rate ranged from 0 to 7%, with an average of 3.5%.
The fund formation costs ranged from $0 to $250k, with an average cost of $125k.
The funds’ headquarters were mostly located in Europe (65.22%), followed by Asia (21.74%) and Australasia (8.70%).
Growth Funds
The study examined a total of 47 growth funds with a diverse geographic focus. The distribution of funds by their primary regional focus includes Europe (38.30%), North America (17.02%), Asia (21.28%), the Americas (12.77%), Australasia (4.26%), Middle East & Israel (4.26%), and Africa (2.13%).
The size of these funds varied significantly, ranging from $3.81 million to an impressive $1.5 billion. On average, the fund size was about $288.38 million, with a median of $156.17 million.
These funds had a lifespan that spanned between 7 to 10 years, averaging around 9.28 years, with the most common lifespan being 10 years.
The target size for the funds ranged from $10.71 million to a considerable $1.25 billion, with the average target size being around $278.96 million. The median target size was $156.17 million.
For the first close target, the range stretched from $10.71 million to $700.0 million, with the average at $191.03 million. The median first close target was $156.17 million.
The hard cap for these funds had a vast range from $37.02 million to $1.6 million. The average hard cap was around $522.93 million, with the median at $290.32 million.
In terms of time to first close and time spent in the market, these funds demonstrated a range of 1 to 13 months to reach their first close, with an average and median of 5 months. On average, the funds stayed in the market for about 10 months, with durations ranging from 1 to 16 months. The median time spent in the market was 11 months.
The funds spread their focus across multiple industries, with a considerable majority (59.57%) having a diversified industry focus. Other sectors included Information Technology (17.02%), Healthcare (10.64%), Consumer Discretionary (6.38%), Real Estate, Energy & Utilities, and Financial Services (all at 2.13%).
During the investment period, the management fee ranged between 1% and 2%. Both the average and median fee during this period was 1.5% and 1% respectively. After the investment period, the management fee had a similar range, but the average dropped to 1%.
The range for carried interest was between 0 and 20%, with both average and median standing at 20%. The hurdle rate for these funds varied between 7% and 8%, with the average and median at 7.5% and 7% respectively.
The fund formation costs ranged from $0 to $750k, with an average cost of $375k.
As for their headquarters, the funds were distributed across the following regions: Europe (38.30%), North America (17.02%), Asia (19.15%), Latin America & Caribbean (14.89%), Australasia (4.26%), Middle East (4.26%), and Africa (2.13%).
Hybrid Funds
Our study concentrated on a single hybrid fund that predominantly focuses on the North American region, encompassing 100% of its geographic focus. With a size of $350 million, this fund is entirely financed in USD.
The fund remarkably managed to reach its first close in a very short period of 1 month. It then remained in the market for a total of 13 months.
True to its primary focus, the fund’s headquartersaresituatedinNorthAmerica, demonstrating its commitment to the region.
Infrastructure Funds
The study incorporated an analysis of 32 infrastructure funds primarily focused on Europe, comprising 68.75% of the total. The remaining funds displayed a diversified regional focus spanning multiple regions (9.38%), Asia (9.38%), Australasia (6.25%), Africa (3.13%), and North America (3.13%).
The fund sizes varied from $72.88 million to an enormous $25 billion, with an average and median fund size of approximately $1.91 billion and $500 million, respectively. The lifespan of these funds ranged from 5 to 17 years, averaging around 10.33 years, with the majority having a median lifespan of 10 years.
In terms of fund size targets, these ranged from $72.88 million to $25 billion, with the average and median targets being approximately $2.03 billion and $500 million, respectively. The first close targets spanned f rom $312.33 million to $10.41 billion, averaging approximately $2.18 billion, with a median of $670.13 million.
The hard cap for the funds lay between $137.23 million and $25 billion, with an average hard cap of approximately $3.03 billion and a median of $624.67 million. Typically, the first close took 5 months, while the average time spent in the market was about 10 months.
A vast majority of the funds were focused on the Energy & Utilities sector (90.63%), with the rest diversified across multiple sectors. The average management fee during the investment period was 0.875%, which persisted post-investment. The investment period generally spanned 2 years.
Carried interest varied f rom 0% to 20%, averaging around 10%. The hurdle rates ranged from 0% to 6%, averaging at 3%. Fund formation costs varied between $0 to $1.5 million, with an average cost of $750k. GP commitments to the total fund ranged from 0% to 25%.
The majority of the funds’ headquarters were located in Europe (75.00%), with the rest scattered across North America (9.38%), Australasia (6.25%), Asia (3.13%), and the Middle East (3.13%).
Mezzanine Funds
Our study examined a single mezzanine fund that primarily focuses on the Americas region. This fund has a size of $300 million, which also matches its target size. In terms of time to first close, this was achieved quickly within just 2 months. The fund had a total market presence for a total of 5 months before closing.
The fund’s investment strategy is exclusively focused on the Consumer Discretionary sector. Interestingly, despite the primary regional investment focus being the Americas, the fund’s headquarters is located in Europe. This positioning highlights the fund’s international strategy and its capacity to operate and invest across different geographic regions.
Natural Resources and Real Assets Funds
Our study reviewed seven natural resources and real asset funds, the majority of which (71.43%) primarily focused on North America,
while 14.29% were diversified multi- regionally, and another 14.29% concentrated on Europe. These funds varied greatly in size, ranging from $65.23 million to a substantial $1 billion. The average fund size was approximately $353.18 million, with a median of $350 million.
The lifespan of these funds extended from 8 to 20 years, with the average lifespan approximating 14 years, and the median lifespan noted at 8 years. The funds’ target size spread from $62.47 million to $1 billion, with the average target size calculated at $385.41 million and the median at $300 million.
In terms of the time to first close, this ranged from 1 to 6 months, averaging at 3 months, which also represents the median time. The funds spent between up to 14 months in the market, with an average of 8 months and a median of 9 months.
These funds mainly invested in Energy & Utilities (42.86%) and Natural Resources (57.14%). The management fee during and post the investment period varied from zero to 2%, averaging at 1%. The investment period for these funds was from zero to 5 years, averaging at 2.5 years.
The hurdle rate for the funds was approximately 8%. The cost of fund formation varied from zero to $750k, averaging at $375k. The General Partners’ commitments to the total fund ranged from zero to 2.5%, with an average of 1.75%.
Lastly, the headquarters of these funds were predominantly located in North America (71.43%), with the rest (28.57%) being situated in Europe.
Real Estate Funds
The study covered two real estate funds with their primary focus split equally between the Middle East & Israel and Asia, each region representing 50% of the total. Both funds had a size of $108 million, yielding an average size of $54.48 million.
The lifespan of these funds was fixed at 5 years. These funds were in the market for a short amount of, with a duration of only 3 months. As real estate funds, they were exclusively invested in the real estate sector, hence 100% of their focus was on this industry.
As for the location of their headquarters, the funds were equally represented in the Middle East and Asia, each region accounting for 50% of the total. This distribution perfectly mirrored their geographic investment focus.
Secondaries Funds
Our study evaluated six secondaries funds, focusing on different geographical areas, with 50% in North America, 33.33% in Europe, and 16.67% in Asia. These funds had a wide range in size, extending from $100 million to an enormous $15 billion. The average fund size calculated was around $3.68 billion, while the median fund size was significantly lower at $548.91 million.
In terms of fund lifespan, these funds operated for a period up to 8 years, averaging around 4 years. The time taken to first close varied between 5 to 9 months, and the funds typically remained in the market for an average of 7.5 months, with a median stay of 7 months.
The funds showed different levels of industry focus, with 83.33% being diversified across
various sectors, while the remaining 16.67% primarily targeted Business Services. Regarding their location, two-thirds of these funds (66.67%) were headquartered in Europe, while the remaining third was evenly divided between Asia and North America, each accounting for 16.67% of the total.
Special Situations Funds
The analysis focused on two special situation funds, one based in North America and the other in Europe, equally representing both regions. The funds’ size varied from $52 million to $138 million.
First close targets for these funds are estimated to be about $69 million.
The time required to reach the first close ranged from one to three months. The funds typically stayed in the market for about six months. As with other types of funds, these special situation funds also showed diversification across various sectors, illustrating no specific core industry concentration.
Management fees during the investment period ranged from zero to 2%, averaging at 1%. A similar range was observed post- investment, with the average management fee also standing at 1%. The investment period for these funds varied from zero to four years, averaging at two years.
In terms of carried interest, the range was from zero to 20%.The hurdle rate for the funds was 8%.
Finally, the headquarters of these funds were distributed equally between Europe and Latin America and the Caribbean, mirroring the geographic focus of the fund’s investments.
Turnaround Funds
Our analysis involved a review of two turnaround funds. These funds were geographically focused on North America and Australasia, with an equal distribution of 50% each.
Fund sizes varied, were $335 million and $400 million averaging at $367.54 million. The funds’ lifespan spanned from zero to five years, averaging out at 2.5 years. The first close targets for the funds displayed some variation, ranging from zero to $268.05 million. The average of these targets was found to be around $134.025 million.
The timeline to the first close ranged from five to nineteen months, with an average duration of twelve months. Moreover, the funds typically spent an average of fifteen months in the market. Despite their regional focus, the funds were diversified across various sectors, demonstrating a lack of a specific core industry focus.
Lastly, in alignment with the geographic distribution, half of the funds had their headquarters located in North America, while the other half were based in Australasia. This equal distribution demonstrated a balanced representation of the funds from these regions.
Venture Capital Funds
Our analysis involved 128 venture capital funds with varying geographical focuses, with the majority based in Asia (35.16%), Europe (25.78%), and North America (24.22%). The fund sizes ranged from $200k to an extensive $1.94 Billion, with the average and median fund sizes being $123.21 million and $50 million, respectively.
The lifespan of these VC funds varied between 1 to 10 years, averaging around 8.62 years, with most funds having a median lifespan of 10 years. The target fund sizes were diverse as well, ranging from $8 million to $800 million, with the average and median targets settling at $129.6 million and $71.36 million respectively. The first close targets for the funds ranged from $74.05 million to $274.46 million, with an average of $144.63 million and a median of $130.14 million.
In terms of time, the first close usually occurred within 2 to 18 months, averaging 3 months. The funds typically stayed in the market for about 8 months.
With regards to core industries, Information Technology (38.28%) and diversified sectors (32.03%) were the predominant focus. The funds had an average management fee of 1.99% during the investment period, which was maintained post-investment. The investment period for these funds was generally between 3 to 5 years, with an average of 4.3 years and a median of 4 years.
Carried interest varied from 10% to 25%, with an average of 17.14% and a median of 20%. The hurdle rates ranged from 5% to 30%, averaging at 9.54% and a median rate of 8%. The costs for fund formation ranged from $30k to $750k, with an average cost of $230k and a median cost of $150k
The General Partners’ commitments to the total fund ranged from 1% to 3%, with an average of 1.8% and a median of 1.5%. Finally, the headquarters of these funds were majorly located in Asia (35.16%), Europe (32.81%), and North America (24.22%).
