Investors ploughed a record amount of money into private equity funds in 2017, according to consultants McKinsey, at $750bn.
This was driven by a surge of US megafunds coming to market, the research found, such as Apollo's record $24.6bn offering.
"The big story in 2017 was about scale. Megafunds raised more than twice as much in 2017 as the year before," said McKinsey's Bryce Klempner. "The industry’s record growth last year is attributable to a single sub-asset class in a single region: US buyout funds over $5bn."
But for smaller funds, despite the vast amounts of investor cash washing into the market, raising cash has not been the easiest of challenges.
Just last month, Lyceum Capital – which backed companies such as the Eat cafe chain – was forced to call time on raising its own fourth fund.
While more money has been funnelled into funds, they have found it harder to invest the piles of cash. McKinsey found that though the value of deals stayed relatively similar between 2016 and 2017, at $1.3 trillion, deal count dropped for the second year in a row by around eight per cent.
"Fund managers’ biggest challenge is now how to deploy capital, rather than raise it, since there is more competition and higher multiples for the deals being done," said McKinsey's Aly Jeddy.
"There are also new players, including traditional asset managers with strong reputations, entering the sector, placing even more pressure on fund managers."
Just last week, it was revealed that BlackRock – which has traditionally focused on public markets – is now looking to raise a private fund.