Private equity fund managers are increasingly looking outside the U.S. for fundraising despite believing the country offers the best opportunities to raise money, new research* from Ocorian, a leading U.S. and global asset service provider, shows.
U.S remains the leading fundraising destination
The study in the U.S. and across Europe with private equity fund managers managing $3.511 trillion found more than half (55%) say the U.S. offers the greatest growth opportunities for fundraising over the next three years. Among U.S. based fund managers that rises to 78%.
By comparison, just a third (33%) selected Europe excluding the UK as the region offering the best growth opportunities over the period. Around 12% of U.S. based managers selected Europe excluding the UK.
Economic uncertainty is driving managers to broaden their fundraising strategies
However, the research found current U.S. economic and geopolitical conditions are having a major influence on firms switching to raise capital outside the country and such view is shared by U.S. based and European fund managers.
Nearly nine out of 10 (87%) say they are reluctantly looking abroad due to challenges in the U.S. while 10% are actively looking abroad and see strong strategic value. Around 4% say the switch overseas is only a short-term move in response to current conditions. However, none of the fund managers questioned said their capital raising remains primarily U.S. focused.
Ocorian’s research found nearly two out of five (37%) firms say that 50% or more of their capital raising will come from the U.S. over the next two years. That compares to just 11% saying the same about Europe excluding the UK, and 5% naming the UK.
Just 2% questioned say none of their capital raising will be in the U.S. over the next two years while 35% say that about Asia and 19% about the Middle East.
Thomas Fahl, Head of AIFM Services at Ocorian, said: “The U.S. market clearly dominates with the majority of private market fund managers confident that it offers the best fundraising opportunities over the next three years. However, current economic and geopolitical conditions are influencing fundraising strategies with U.S. based private equity fund managers looking to other markets for capital. We see this trend mirrored in the increased level of interest for our services enabling an AIFMD-compliant fund marketing in the EU.”
Rebecca Thorpe, Global Head of Regulatory Consulting at Ocorian, added: “As fund managers broaden their fundraising internationally, they will need to navigate different regulatory regimes, market practices and investor requirements. Successfully managing that complexity will be key to supporting efficient capital raising, maintaining investor confidence and enabling sustainable growth across jurisdictions”.
The table below shows where private equity fund managers expect to raise capital over the next three years, with the U.S. remaining the key market.
| Region | Firms expecting to raise no capital in region over next two years | Firms expecting to raise up to 5% of capital in region over next two years | Firms expecting to raise 5% to 10% of capital in region over next two years | Firms expecting to raise 10% to 25% of capital in region over next two years | Firms expecting to raise 25% to 50% of capital in region over next two years | Firms expecting to raise over 50% of capital in region over next two years | Don’t
know |
| USA | 2% | 9% | 20% | 7% | 25% | 37% | Zero |
| Canada | 7% | 29% | 20% | 25% | 15% | 3% | Zero |
| Middle East | 19% | 22% | 27% | 18% | 13% | Zero | 1% |
| Asia | 35% | 13% | 25% | 18% | 6% | 1% | 1% |
| UK | 12% | 12% | 31% | 30% | 9% | 5% | 1% |
| Europe excluding UK | 7% | 10% | 24% | 19% | 28% | 11% | 1% |
| Other – Latin America, Africa | 27% | 10% | 25% | 26% | 10% | Zero | 3% |
