It's been a relatively quiet start to the year. But a few notable funds trickled in this week. KKR closed its latest healthcare-focused growth fund on $4 billion. Recognize Partners, a new firm led by former executives at Clayton, Dubilier & Rice, Oracle and Cognizant Technology Solutions, held a $1.3 billion close for its a debut fund, an impressive sum for a first-time effort. Goldman Sachs raised a fresh $5 billion fund through its Petershill platform, which buys minority stakes in other private equity firms.
And new evidence emerged that some much bigger stuff is on the way. Welsh, Carson, Anderson & Stowe has set out to raise $5 billion for its next vehicle, The Wall Street Journal reported this week. British investor Hg is aiming to raise nearly $15 billion across a pair of buyout funds, including $8.5 billion for its next flagship effort, per Private Equity News. The WSJ also reported that Leonard Green & Partners is targeting $17 billion for its own pair of funds, including a flagship effort that could reach $13.5 billion.
If they materialize as planned, those vehicles will all be part of a new generation of private equity mega-funds expected to emerge this year. Fundraising tends to move a bit more slowly than the rest of the private equity market. After all, it can take some time to pull together $20 billion or so from a network of global investors. But after the dealmaking frenzy of 2021, when more than $1.2 trillion in private equity transactions took place in the U.S. alone, per PitchBook, many of the biggest private equity firms are now refilling their coffers.
And many pension funds and wealthy investors are more eager than ever to pump their dollars into private equity, which in many cases holds the prospect of higher returns that can be found in fixed-income markets amid the current low-rate environment. The tide could turn if a rate hike materializes in the coming months. But over the past couple of years, the overall pie of alternative assets has been growing, making it more feasible for established firms to grab bigger and bigger slices.
As is so often the case with these sorts of things, Blackstone is leading the way. The world's biggest private equity firm could target as much as $30 billion for a new fund this year, per a Bloomberg report from last year. That would surpass Blackstone's previous vehicle as the biggest pool of capital in the history of the industry.
Depending on how the next several months unfold, however, a different firm might seize that title, instead. The Carlyle Group is said to be eying a $27 billion fund, which is also larger than any other private equity vehicle that's ever been raised. Advent International reportedly holds hopes of raising $25 billion. Thoma Bravo has begun marketing a new fund that could reach $22 billion, according to Buyouts, a process that began less than a year after it closed a $17.8 billion fund. Fellow tech investor Vista Equity Partners reportedly plans to launch a new fund later this year that could target as much as $24 billion, again per Buyouts.
It's a lengthy list. If the seven U.S.-based firms I've mentioned in the preceding paragraphs (all except Hg) were to close their funds this year and reach their reported targets, it would add up to a whopping $130 billion across just eight different vehicles. Again, for comparison's sake, there was just over $300 billion in total capital raised in the U.S. last year across 389 total funds, per PitchBook. The all-time record is $326.1 billion. It seems fair to begin wondering whether that mark is in danger.
No mega-funds closed in the first two weeks of the year. But it could prove to be the calm before a once-in-a-generation storm.
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