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WSJ Pro Special Report: Mid-Year Fundraising Favors Veteran Firms
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Private-equity fundraising has long been something of a class system, split between those managers that can handily raise ever-larger funds each time they return to the marketing trail and everyone else.
The disparity between these fundraising haves and have-nots tends to widen at times of market uncertainty and turmoil. Perhaps it’s not surprising that as the coronavirus pandemic spread in the U.S. this year, investors parked more of their commitment dollars with fewer managers. The obstacles to in-person meetings have made it particularly challenging for limited partners to invest capital with managers they have not previously backed. Some of the brighter spots on the fundraising front this year were distressed debt and special situation strategies, which enjoyed an uptick in the second quarter. In this special report, our WSJ Pro reporters unpack the fundraising and deal-making trends that unfolded in the first half of 2020.
We hope that you enjoy this special content...
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Private Equity Analyst
You can read the August issue of our monthly magazine, Private Equity Analyst, here. Find in-depth news, detailed analysis, reviews and opinion—curated for the venture-capital and private-equity communities.
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Pandemic Slowed Fund Closings in First Half
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PHOTO: Getty Images/iStockphoto
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Private-equity firms are finding it harder to close new funds in the time of social distancing and Zoom meetings, writes WSJ Pro's Chris Cumming.
The number of new private-equity funds to reach a final close fell sharply in the first half of the year, with the decline accelerating after the coronavirus pandemic caused states to impose mass lockdowns late in the first quarter. Globally, 552 private-equity funds reached their final close in the first half of the year, 31% fewer than in the same period last year, according to data provider Preqin Ltd.
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283
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The number of private-equity deals completed—excluding addons—in the U.S. over the course of the first six months of the
year, compared with 491 transactions recorded in the same
period last year, according to Dealogic.
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Private-Debt Fundraising Gains Popularity
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A shuttered business in New York. Distressed debt is drawing new interest as investors seek opportunities amid a pandemic that continues to spread further into the U.S.
PHOTO: JUSTIN LANE/SHUTTERSTOCK
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Private-credit fundraising returned to popularity in the first half of the year as the coronavirus pandemic gave distressed-debt investors hope that a window of bargain-hunting might be opening, reports Chris Cumming.
The lull in demand for distressed debt, caused by low interest rates and a record economic expansion, may have broken this year. Private-debt funds raised $55.5 billion in the first six months of 2020, about $1.1 billion more than they collected in the same period last year.
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VC Funds Amass Record-Setting $61.3 Billion in First Half
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PHOTO: GETTY IMAGES
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Even as global markets reeled through the first half of 2020, venture funds filled their coffers with $61.3 billion, representing a multiyear high, Yuliya Chernova reports, citing data provider Preqin Ltd.
The market for venture funds skewed heavily toward North America, away from Asia, and toward large funds, away from smaller pools this year, new data show.
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Energy-Focused Firms Struggle to Raise Capital
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An oil pumpjack in Signal Hill, south of Los Angeles. Energy funds have become a tougher sell, with some institutional investors turning toward cleaner power.
PHOTO: FREDERIC J. BROWN/AGENCE FRANCEPRESSE/GETTY IMAGES
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Energy-focused private-equity firms are finding it increasingly difficult to raise capital in the face of depressed oil prices and growing pressure on investors to stop investing in fossil-fuels, WSJ Pro's Luis Garcia reports.
Private-equity firms closed 20 energy-focused funds world-wide in the year to June 30, down 39% from the 33 such vehicles they wrapped up in the same period last year, and the poorest first-half showing by such funds since at least 2015, according to data provider Preqin Ltd.
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Global Venture Market Levels Out in First Half
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Online learning company MasterClass raised a major growth round during the coronavirus pandemic. PHOTO: GABBY JONES/BLOOMBERG NEWS
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The global venture market blew past fears over the coronavirus pandemic and a world-wide recession to stay robust through the first half of the year.
Private companies around the world raised $112 billion in venture capital through 6,379 deals in the first six months of 2020, according to data provider Preqin Ltd. The dollar total was down 2% from the first half of last year, Yuliya Chernova reports.
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Steep drops in first-half deal numbers and value reflect effects of the coronavirus pandemic PHOTO: SAEED KHAN/AFP via Getty Images
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Lockdowns that went into effect to help stem the coronavirus pandemic earlier this year grounded many private-equity deal makers and curbed first-half merger-and-acquisition transactions, figures from data provider Dealogic Ltd. show, Laura Cooper writes for WSJ Pro.
The data show that deal volume and value in the U.S. fell sharply during the first half as the rapidly spreading outbreak, collapsing demand and resulting economic uncertainty left many deal makers at private-equity firms focused on stabilizing their portfolio companies rather than chasing new opportunities.
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In Their Own Words With Placement Agents and LPs
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The coronavirus pandemic stunted private-equity fundraising during the first half, prompted by widespread lockdowns and economic uncertainty. We asked a handful of investors and placement agents to share their thoughts on the challenges and opportunities that lie ahead.
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