Private Equity Market Concentrates as Top Funds Drive Half of Capital Raised in 2024

Private-equity firms are seeing a shift in the industry as the first quarter of 2024 comes to a close. According to financial data provider Preqin, the total capital raised by private-equity firms globally reached $166.8 billion, with about half of that coming from the closing of just 10 funds.

Despite a decrease in the number of funds closed compared to the previous year, the aggregate total of capital raised remained relatively steady. Private-equity firms based in Chicago closed 17 funds during the quarter, raising $22.04 billion, marking a 49% increase from the same period in 2023.

“This quarter has once again confirmed the trend toward industry concentration,” Preqin stated in a report. The uncertainty surrounding the U.S. economic recovery, inflation, and the Federal Reserve’s decision to hold interest rates steady have impacted expectations for buyouts of private companies in 2024.

“It is still a tough market for a lot of funds out there,” said industry expert Witte. “Concentration of assets is something that has been a longer-term trend. It has been accelerating in this market.”

The appeal of diversification offered by the largest private-equity funds has attracted investors seeking certainty amidst economic volatility. “LPs are really attracted to managers that are able to invest across asset classes,” Witte added. “Having a broad platform where they can get exposure to credit, buyout, growth equity, and infrastructure, among other asset classes, helps a lot.”

As the private-equity market continues to evolve, industry players are navigating challenges and opportunities to secure funding and drive growth in a changing economic landscape.