May 19, 2017
Interviewed by: Privcap
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MVision: Why the U.S. Dominates Fundraising

The head of a major private equity placement agent explains why U.S. private equity dominates as a destination for global capital.

The head of a major private equity placement agent explains why U.S. private equity dominates as a destination for global capital.

Why the U.S. Dominates Fundraising

Privcap: In 2016, U.S. private equity fundraising greatly surpassed Europe. What can you tell us about these divergent statistics?

Mounir Guen, MVision:
You can see statistically that it’s extremely difficult to match the volumes of the United States if you’ve got the headcount, the large funds and the depth of the investor community, right? It’ll be a long time, probably 20 or even 30 years, before other geographies can match.

U.S. general partners and U.S. investors constitute the majority of the market share globally, in volume and in content. So…you’re looking at the oldest general partners that are approaching 40 or 50 years of history. You’re looking at firms that have established models of business that are very sophisticated and that understand extremely well the sourcing, the management and ownership of their investments.

Now, when you leave the United States, two things happen. One is the volume of general partners with whom you can invest drops dramatically the further you get from the U.S. and also from Europe. The number drops. The size of the funds drop and they drop quite dramatically as you touch new markets.

Privcap: The creation of new GPs in the U.S. has been significant. How have spinouts in Europe influenced the fundraising activity there?

What happened in Europe in the last 10 years or so is that, until recently—until the last couple of years—there’s been virtually no new, new names. Whilst in the United States, I can point to a number of funds who, in the last five to eight years, came into the market and have become dominant presences, increasing their fund sizes from $1 billion to $2½, to $4½ or $5 billion and more.

Guen: The new groups that have been coming out in Europe have usually been in the range of about $300 to $500 million, of completely different texture. Again, unlike their U.S. cousins, when they come to raise their next fund, they’re not doubling in fund size. They’re normally 30% larger in fund size, maybe 50% sometimes, whilst the U.S. ones can double or more than double in size. And that affects the top line in terms of the statistics.

Even in Europe, Central Europe is nowhere to be found in terms of investors—very, very limited private equity general partners. That really drives us all to Western Europe, and then more to the north and the U.K.

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