Tail-end private capital funds – those that are ten or more vintage years-old – still hold $593bn (€506.5bn) in total assets, including $525bn in unrealised value, new Preqin research has found.
Private equity accounted for the majority ($391bn) of total tail-end unrealised value globally, while private debt and infrastructure vehicles held smaller yet significant amounts of $39bn and $42bn respectively. Tail-end real estate funds held $30bn at the end of 2017.
This total accounted for ten per cent of the assets held by the industry worldwide which, by the end of 2017, reached $5.22tn.
The majority of tail-end unrealised value is held in 2006, 2007 and 2008 vintage funds, which held $117bn, $154bn and $205bn respectively.
Although North America-focused funds held the largest portion ($314bn) of tail-end unrealised value, of which $103bn is held by 2008 vintage funds alone, tail-end funds with a Europe-focus held a significant $132bn in unrealised value. Asia-focused tail-end funds held $54bn.
The data, published in Preqin’s Secondary Market Update for Q2 2018, suggests a growing proportion of investors in private equity may now be looking for ways to redeem their investments.
“One in ten invested dollars has been in the industry for a decade or more,” explained Preqin’s head of private equity products Christopher Elvin, when commenting on the report.
“While some of the assets will have exit routes open to them, others may be facing a challenging exit strategy without assistance from private capital secondaries vehicles.”
The report revealed that seven secondaries vehicles raised a total of $7.6bn in Q2 2018, including the largest real estate fund ever, which secured £3.3bn.
Preqin’s forecast showed there were now 39 secondaries funds in market targeting a total of $52bn, a significant jump since January, when aggregate capital targeted in the secondaries market was just $21bn.
Two of these funds, the ASF VIII and the Lexington Capital Partners IX, are looking for $12bn each, making them both the largest secondary funds ever if they were to meet their targets.
Elvin added: “We’ve seen the aggregate capital sought by funds in market jump by well over 200 per cent from January to July. This would indicate that managers are taking notice of the capital available in the secondaries market, and pushing forward bigger funds than ever before.”