Global private equity slows to 5-year low amid shrinking capital

Private equity firms raised $492.3 billion in 2024, the lowest value since 2020. The year also saw just 551 private equity (PE) funds, the smallest number of PE funds since 2014.

This is as PE capital raised in 2024 declined by 18 percent from the $600.2 billion recorded in 2023.

These figures come from PitchBook’s 2024 Global Private Market Fundraising Report.

Private capital fundraising totaled $1.136 trillion in 2024, marking a 19.1 percent drop from the $1.35 trillion raised in 2023. The number of funds also plummeted by 45.9 percent to 2,538.

According to the report, the decline in private equity fundraising was driven by reduced capital availability, largely due to a slowdown in cash distributions by general partners. This trend negatively impacted fundraising across private equity and other private capital markets.

Read also: Private equity firms in Nigeria face worst year for investment exit

The rise of megafunds

A significant trend in private equity is the growing dominance of megafunds—PE funds exceeding $5 billion. In 2024, these funds accounted for more than half of all private equity capital raised. Limited partners increasingly favor experienced fund managers over mid-sized and smaller funds, consolidating capital into fewer but larger funds.

Europe has been a key driver of this megafund trend, with its share of global PE fundraising rising from 18.4 percent in 2022 to 27.2 percent in 2024. In 2023, 20 European PE funds raised approximately €94.8 billion (about $102.6 billion), with just five of them contributing more than half of that total.

The largest private equity fund raised in 2024 was the $23.747 billion EQT X Fund by Swedish investment firm EQT Group. Following closely was the $20.5 billion Silver Lake Partners VII fund by American tech investment firm Silver Lake.

The $20 billion Vista Equity Partners Fund VIII, the $15.425 billion New Mountain Partners VII, and the $15.4 billion Partners Group Direct Equity V rounded out the top five.

Private capital fundraising declines

The downturn in PE fundraising reflects a broader decline in private capital markets. Venture capital fundraising in 2024 fell by 25.8 percent year-on-year to $160.4 billion, with the number of funds dropping 41 percent to 1,402.

Similarly, private real estate fundraising dropped by 32 percent, with $64.7 billion raised. Private debt fundraising also saw a decline, down 19.6 percent year-on-year to $196.1 billion.

However, one exception was the secondary market, where limited partners exited $101.6 billion worth of private capital positions—a 30 percent surge from the previous year.

Private capital draining from Africa

The shift in private capital away from smaller and mid-sized funds is evident in Africa, where PE fundraising accounted for less than 1 percent of global totals. African private capital fundraising suffered an even steeper decline.

According to the African Venture Capital Association, private capital inflows into Africa dropped 53 percent year-on-year as of the first nine months of 2024. Venture capital dominated the region’s private capital landscape, comprising 62 percent of total volume and 52 percent of total value. However, venture capital inflows still fell 49 percent year-on-year.

Private equity fundraising in Africa was particularly weak, with just $400 million raised in 2024—the lowest level in seven years and a 66 percent decline from the same period in 2023.

As funding dries up, African startups are adjusting by scaling back growth ambitions and prioritizing operational efficiency. Private equity and venture capital firms have also been forced to downsize their deals. By the third quarter of 2024, Africa’s average private capital deal size had shrunk to $11.5 million, a sharp decline from $35 million in 2017.