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Private Equity Funding Growth Continues: Report

We reported recently on the continued growth in PE investment globally — with a focus on certain regions. We noted examples of global private equity growth in Ireland, Australia, India.

Reuters reports that, according to Pitchbook, “U.S. private equity firms raised $191 billion in the first nine months of 2019, nearly as much as in all of 2018, as investors flocked to well-known managers raising large capital pools.”

Indeed, the numbers shows a potential move towards known quantities in the private equity world as the new numbers show an increase in the “amount raised by private equity funds by 38% year-on-year, even as the number of funds that raised capital fell 18% to 131.”

[Note: Access the full Pitchbook report here, which “explores the major factors shaping the market overall and provides a review of key metrics and themes, including: How GPs are positioning in the case of an economic downturn; the drivers behind 2019’s record fundraising pace and the implications of this frenetic cycle; [and] a spotlight on mega-fund performance as more $5 billion-plus vehicles close.”]

As part of its analysis, Pitchbook argues that the China-US trade war may be playing a role — that the resulting global economic concerns may “help create bargains that will allow private equity firms to put money to work.”

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One trends to keep an eye on: As private Equity funding continues to grow, certain select IPOs are being rethought. Over the last weeks, some well-known — and less well-known — IPOs have come under scrutiny and reevaluation.

Amid the private equity funding growth, there’s continued attention on select IPOs. ADC Therapeutics, a Swiss biotech developing next-gen antibody drug conjugates for difficult cancers, pulled back from its planned IPO last week. That came on the heels of pullbacks from Endeavor and WeWork.

However, reports that “US VC exits hit record-breaking $200bn with a whole quarter of 2019.” Further, Pitchbook notes that some of the IPOs that have struggled for the time being may be examples of “young companies with big names and even bigger losses.”

Private Equity Investment Grows: Solar Sector Example

Nevertheless, investments — including in private equity — continue to run strong. Indeed, PE News notes that “Globally Preqin estimates there to be $2.5tn of dry powder. The data provider also found that the number of private equity funds coming to market had reached almost 4,000 at the start of the third quarter, seeking $981bn from investors.”

One sector example: Solar.

As the Midland Reporter-Telegram reports: “Total corporate funding in the solar energy sector, including venture capital, private equity, public investments and debt financing in the first nine months of the year totaled $9 billion, compared to $6.7 billion for the same period one year earlier, according to a new report from Mercom Capital Group.”

According to the report, “Venture capital and private equity firms raised $1 billion so far this year compared to $889 million in the first nine months of 2018,” as “solar developers announced 120 large-scale projects during the first nine months worth $13 billion compared to a year ago when 137 projects were announced worth $11.2 billion”