Key Takeaways
- • Global private equity capital raised in 2017 reached $701 billion, nearly matching the previous year's high-water mark, with buyout funds leading fundraising activity.
- • Global buyout investment value grew 19% to $440 billion in 2017, driven by large public-to-private transactions despite a declining number of individual deal closures.
- • The private equity industry completed its strongest five-year fundraising period in history, as limited partners continued allocating capital based on PE's outperformance relative to other asset classes.
- • General partners faced intensifying competitive pressure and record-high deal multiples in 2017, creating a challenging environment for identifying investment opportunities at attractive valuations and limiting the total number of closed transactions.
- • Largest buyout funds ever raised in the US, Europe, and Asia markets signaled strong investor confidence in PE prospects, though GPs faced mounting pressure to deploy capital efficiently and generate sustainable returns.
Summary
Bain & Company's 2018 Global Private Equity Report documents a year of mixed signals for the industry in 2017. While capital formation remained robust—with $701 billion raised globally—and investment values posted healthy gains, the underlying deal environment grew increasingly constrained. The report captures an industry at an inflection point, where strong fundraising momentum collided with structural challenges in deal sourcing and valuation discipline.
The fundraising environment in 2017 reflected sustained institutional confidence in PE as an asset class. Limited partners continued to commit capital at record pace, completing the strongest five-year fundraising stretch in the industry's history. This confidence manifested in the largest buyout funds ever raised across major markets: the US, Europe, and Asia. This capital inflow signals deep conviction among institutional investors that PE managers can deliver superior risk-adjusted returns compared to public equities and traditional alternatives.
However, deployment of this capital faced significant headwinds. Despite the 19% year-over-year growth in global buyout investment value to $440 billion, the number of individual transactions declined, a trend that had pressured deal counts for several years running. The paradox of plenty—abundant capital seeking limited quality opportunities—created a challenging competitive dynamic. General partners competed intensely for assets while deal multiples reached record levels, making it increasingly difficult to source transactions at valuations that supported historical return targets. Large public-to-private transactions anchored the investment value growth, but these marquee deals could not offset the scarcity of mid-market and smaller opportunities.
Looking forward, the report suggests that the industry faces a critical challenge: deploying new capital while maintaining underwriting discipline and generating sustainable value creation. The converging pressures of competitive asset competition, elevated entry valuations, and continued LP demand for capital deployment will require GPs to innovate in deal sourcing, leverage operational value-add strategies, and potentially expand geographic or sector focus to sustain historical return profiles.
The fundraising environment in 2017 reflected sustained institutional confidence in PE as an asset class. Limited partners continued to commit capital at record pace, completing the strongest five-year fundraising stretch in the industry's history. This confidence manifested in the largest buyout funds ever raised across major markets: the US, Europe, and Asia. This capital inflow signals deep conviction among institutional investors that PE managers can deliver superior risk-adjusted returns compared to public equities and traditional alternatives.
However, deployment of this capital faced significant headwinds. Despite the 19% year-over-year growth in global buyout investment value to $440 billion, the number of individual transactions declined, a trend that had pressured deal counts for several years running. The paradox of plenty—abundant capital seeking limited quality opportunities—created a challenging competitive dynamic. General partners competed intensely for assets while deal multiples reached record levels, making it increasingly difficult to source transactions at valuations that supported historical return targets. Large public-to-private transactions anchored the investment value growth, but these marquee deals could not offset the scarcity of mid-market and smaller opportunities.
Looking forward, the report suggests that the industry faces a critical challenge: deploying new capital while maintaining underwriting discipline and generating sustainable value creation. The converging pressures of competitive asset competition, elevated entry valuations, and continued LP demand for capital deployment will require GPs to innovate in deal sourcing, leverage operational value-add strategies, and potentially expand geographic or sector focus to sustain historical return profiles.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.