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Steep drop in private equity fund launches in 2022


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Steep drop in private equity fund launches in 2022

A total of 481 private equity funds were launched globally year-to-date through Dec. 19, 2022, representing a 67% decline from 2021 when 1,464 funds launched, according to S&P Global Market Intelligence data.

Some factors that slowed the pace of new funds were macroeconomic, such as record-high inflation, multiple interest rate increases and slowing growth that shaped the worldwide economic landscape in 2022.

Additionally, some institutional investors had to forgo previous investment allocation targets due to the denominator effect, and the record amount of dry powder as well as the falloff in exits likely contributed.

Almost all regions had more than a 50% drop in the number of funds launched when compared to 2021.

North America had the lion's share of new private equity funds over the past two years, according to Market Intelligence data. It also saw the largest annual drop in fund launches at 70% to 304 from 999 funds in 2021.

The second-largest drop was recorded in Asia-Pacific, where fund launches totaled 76 as of Dec. 19, 2022, compared to 246 in all of 2021.

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Five of the largest funds launched in 2022 are in the market with a target of $10 billion or more each.

These include Thoma Bravo LP's Thoma Bravo Executive Fund XV LP and Insight Venture Management LLC's Insight Partners XIII, which will seek targets in the information technology sector, as well as Ardian's ASF IX, TPG Capital LP's TPG Partners IX and Genstar Capital LLC-managed Genstar Capital Partners XI LP, which are all diversified strategies, according to Market Intelligence data.

In 2021, 11 funds in market were targeting $10 billion or more.