The first three months of 2025 continued the slow fundraising market seen in 2024, according to Private Equity International's Q1 2025 fundraising report. The market was off to a soft start, with about 509 funds collecting $179.1 billion (about R3.4 trillion) between them during the first quarter — nearly $22bn lower than the same period a year ago.
Will institutional investors, family offices and asset managers have enough disbursements to respond to the chaos tariffs and provide solutions for economic growth and employment growth? How will global inflation affect the developed economies, emerging markets and low-income countries? What will the United States do when China does not withdraw its retaliatory tariff command? What’s more powerful between real GDP and GDP Purchasing Power Parity in terms of reciprocal tariffs? Who will win, who will lose and by what means of mechanism?
This marks the lowest first-quarter total since 2020, when $162.8bn was raised during the period.
The first-quarter fundraising activity in South Africa and Africa showed disappointing low numbers, a portrait that the region might not recover from private equity dealmaking and exits and fundraising. The South African government's R100 billion fund will be positioning the private equity activity as more secondary investors will be required for both the equity and debt commitments.
By strategy, buyouts remain the most favoured, accounting for 38% of capital raised in the first quarter. This was followed by secondaries at 26% and growth equity at 22%.
The secondaries total was buoyed by Adrian’s record-breaking Secondary Fund IX, which closed at $30bn during the quarter, marking it the Largest private equity fund to have closed historically, and ICG’s Strategic Equity Fund V, which amassed $11bn against a $6bn target. They were the two largest funds ro close during the first quarter of 2025 and together made up about half of all capital raised by the 10 largest funds.
Fundraising timelines, measured from a vehicle’s launch to its final close, averaged 18 months in the first quarter of the year, well above the average of around 13 months from 2020 to 2024. It is, however, slightly lower than the 19 months recorded across the entirety of 2024.
Multiregional focused funds made up 44% of capital raised in the quarter, followed by North focused funds at 31%. Europe and Asia Pacific-focused funds represented 19% and 5%, respectively. The rest of the world focused funds portrays the poor raising performance for South Africa and the rest of Africa markets, signalling no cloud for South Africa and the rest of Africa to recover for dealmaking, exits and fundraising, in in 2025, with added disruptions as a result of tariffs imposed by the US and retaliation by China.
The number of funds to close at above the target during the period also improved slightly from GY 2024, reaching 78%. In 2024, only 72% met or exceeded their goal.
Moving on to the second quarter, the path ahead remains uncertain amid disruption to global trade wars caused by recent tariff announcements in the US. While many market participants have previously voiced optimism that 2025 could be a year of recovery for dealmaking, exits and fundraising, the implications of US President Donald Trump’s trade war may leave private equity firms facing a battle when raising capital.
Recovery for dealmaking, exits and fundraising can be a dream to force in 2025. South Africa needs a balanced manufacturing and technology fund to jumpstart the economy for economic growth and employment growth.
* Miyelani Mkhabela is a South African businessman and the chief investment strategist at Antswisa Capital, based in Johannesburg.
** The views expressed here do not reflect those of the Sunday Independent, Independent Media, or IOL.