Total capital raised in 2020 fell relative to the record high of €196bn (US$220.3bn) attained in 2019, largely as a consequence of the pandemic. Nearly a third of managers said they hadn’t raised any new capital in 2020, with many citing a lack of available product as the main reason. The number of vehicles raising capital also dropped year-on-year from a record 982 in 2019 to 699 in 2020. Despite this slowdown, on average the capital raised by individual vehicles was higher than in 2019 except for those with a North American regional strategy. The average capital raised for each vehicle with a global strategy was €0.8bn (US$ 1bn) versus €0.5bn (US$0.6bn) in 2019. Similarly, investment activity remained robust with 52 per cent per cent of capital raised in 2020 already deployed. Furthermore, more than two thirds (76 per cent) of investment managers expect an increase in capital raising activity over the next two years.
A significant proportion of the new capital raised – 41 per cent – was allocated to vehicles targeting Europe, while 24 per cent was destined for vehicles aimed at North America, and 17 per cent assigned to Asia Pacific vehicles. The remaining 17 per cent was targeting global strategies and tended to raise a notably larger amount of capital per vehicle than the 2021 average. Of the total capital raised, a record 60 per cent (€74bn/US$90.7bn) was destined for non-listed real estate funds, emphasizing the continuing strong appetite for these vehicles among institutional investors around the world. A total of €51bn was raised for European strategies in 2020, with non-listed funds again featuring prominently, attracting 39 per cent of all new capital raised in the region. Separate accounts were the second most important target vehicle, securing 23 per cent of the new equity. The share of new capital raised for European funds following a multi-country and multi-sector strategy increased from 41 per cent in 2014, to 62 per cent last year. While this comes at the expense of single-country multi-sector funds, they are still the second choice for investors with a share of 14 per cent. Single-country single-sector funds and multi-country single-sector funds accounted for 12 per cent and 11 per cent of total capital raised, respectively. This move towards multi-sector and multi-country strategies reflects investors’ growing appetite for diversified strategies through large stable income producing assets, with low leverage. Increasingly, it’s an approach that appeals to, and is achievable for, smaller investors as well as their larger counterparts.