How Private Equity Firms are Raising Capital in 2021

17th September 2021

Are you an established private equity company? A critical aspect of the success of any PE firm is its ability to raise capital. Private equity firms are built on deep expertise and experience. Therefore, they are looking at an expansive rise in income in the first half of 2021.

Private equity firms, family offices and self-made sponsors rely on debt capital to boost their acquisitions and expand their portfolio companies. All through the economic downside, they ensured lots of preparation.

Even though it is a pandemic troubled economy, they have continued to thrive. Private Equity firms are expected to go through a strong momentum in 2021 after a comeback from last year’s fourth quarter.

Generally, since the 2013 peak financial crisis, the fundraising market has been a challenge. As a result, the TwoandTwenty team have identified a couple of short and long term trends in which private equity sector use to generate high economic cycles.

What is Private Equity?

Private equity concept refers to capital invested in a company or another business entity that is not publicly listed or traded. It is also a source of capital investment from high net worth individuals and respective firms.

Private Equity in raising capital

During the evaluation of fundamental sources of new income, institutions tend to dominate. Approximately eight out of ten private equity firms are looking to endowments and pension schemes. Circa more than two-thirds consider family offices as a good source of capital.

It is so because most family offices prefer to handle their operations off the grid and source services from trusted associates.

A good percentage of private equity funding is seeking investment from government or sovereign wealth funds. More, research shows 35% of private equity funds are looking to secure individual investors.

Other than their relationship with prospects, close to 60% of private equity funds engage third-party placement agents. It is achieved through certified financial investors.

Unlike other funds, private equity houses usually don’t have a permanent source of capital. They increase revenue through a handful of ways. They include but not limited to:

  • Venture capital funding
  • Family offices
  • Venture debt and challenger banks
  • Private equity funds
  • Institutional investors
  • Strategic investors and joint venturing arms.
  • Tax-efficient funds

To sum it up, with billions in acquisition of dry powder funds available, greater certainty in the economy and strong tempest from anchorage finance, firms are looking to deploy funds in enthralling opportunities. Amidst rising competition, they will need viable business investments theory and the ability to improve value.