Chart of the Week: Megafundraising Q3 2012-Q4 2014

Megafundraising stays inconsistent.

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Megafunds have always captured the attention of fundraising figures across all asset classes. Media constantly tracks fundraising events for these funds and everyone always wants to know who raised the biggest fund. So, it seems appropriate to ask how much of fundraising market is actually affected by megafunds. Are these funds accurate depictions of the market, or are they simply good material for the press?

Looking at the past seven most recent quarters, we can tell that funds sizing more than $5 billion close sporadically. In some quarters, these funds may contribute up to 40% of the capital raised, in others we see none. For example, the quarter most influenced by megafunds was Q1 2014. This can be credited to two funds, Blackstone Group’s Blackstone Real Estate Partners Europe IV with a size of €5.1 billion and Pacific Investment Management Company’s PIMCO BRAVO Fund II with $5.5 billion. The sum of these funds accounts for around 40% of the global real estate capital raised. However, on the opposite end, three out of seven quarters did not see any megafund closings.

If we were to only focus on megafund content, we would be completely unaware of all occurrences in three of out the seven quarters. For that reason alone, we should know that megafunds are not indicative of the market. On occasion, such as in Q1 2014, it can be. However, more often than not it isn’t. So, the net time there is an article on a $10 billion real estate fund, we can be sure to do follow up research.