Private equity fundraising in the U.S. hit an all-time high of $301.3 billion in 2019, a year-over-year increase of 52.3%, across 202 funds, a decrease of 5.6%, according to PitchBook's annual U.S. private equity breakdown released Friday.
U.S. private equity investment activity totaled $678 billion across 5,133 deals by year-end 2019, compared with $730.3 billion across 5,345 deals in 2018.
"Record-high fundraising numbers in 2019 coupled with recessionary fears will create an interesting dichotomy in the coming year," Wylie Fernyhough, senior private equity analyst at PitchBook, said in a statement. "PE firms with recently raised capital from a record fundraising year will likely feel pressured to buy."
Fernyhough noted, however, "we are seeing some peak-like indicators, including the rumored and audacious $70 billion+ potential buyout of Walgreens, and hearing PE firms are cautiously preparing for a recession during their holding time."
After a lull in 2018, funds $5 billion and larger accounted for the highest proportion of capital raised since 2007: 53.8% of total capital raised in 2019. Fifteen mega-funds closed a total of $162.2 billion, including the record-breaking $26 billion Blackstone Capital Partners VIII fund.
Tech-focused private equity funds — a growing trend in the industry, according to PitchBook — also enjoyed a record-setting fundraising year.
According to the report, attractive performance accounts for the trend with tech-focused funds realizing an 18.9% internal rate of return over a 10-year horizon. This is nearly five percentage points higher than that for non-tech private equity buyouts and nearly double that for non-tech growth funds.
Investment Activity
PitchBook reported that private equity dealmakers continued to pay elevated prices despite ongoing recession fears, with median buyout enterprise value/EBITDA multiples remaining relatively unchanged in 2019, falling from 11.5x in 2018 to 10.9x last year.