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PitchBook Analyst Note: The Role of Placement Agents in GP Fundraising

Q1 2023

PitchBook Analyst Note: The Role of Placement Agents in GP Fundraising

January 19, 2023

What a placement agent can do for GPs

Private market fund managers are expected to brace for a tough year ahead, amid a flurry of unfavorable conditions ranging from rising interest rates to the freeze in the IPO market. In addition, big declines in public market valuations left many institutional portfolios overallocated to private market investments. Limited partners grappling with the so-called “denominator effect” had to stop pouring money into new commitments and offload stakes in private funds on the secondary market. 

Facing these challenges, some general partners—particularly first-time and emerging managers, as well as GPs looking to raise capital from other geographies—might find help from a placement agent, who can assist them in navigating the harsher fundraising environment by offering services such as finding the right institutional investors and preparing marketing and due diligence documents. 

Our latest analyst note explains the role that placement agents play in the fundraising process and how their guidance can help level the playing field between established managers and firms raising first-time funds.

Key takeaways

  • Experienced managers made up 84.8% of the capital raised through Q3 2022, leaving first-time and emerging managers in a precarious position.
  • About 12.5% of the 2,760 funds closed through Q4 2022 used a placement agent to assist in their fundraising. 
  • After the COVID-19 pandemic, funds that retained placement agents took more time to close than those that didn’t, data shows. In 2021, funds working with placement agents spent 18.6 months in the market, while the remaining funds spent 16.6 months. 

Table of contents
Key takeaways 1
Introduction 2
What are placement agents? 2
Why might a GP work with a placement agent? 4
Why might a GP not work with a placement agent? 6
Fundraising cycle 7
Conclusion 12
League tables 12