Money Flows to the Biggest Buyout Funds

In the world of private equity, it may help to be big.

Half of all capital raised for private equity buyouts in 2013 went to the biggest funds, according to data released on Friday by Preqin, a research firm based in London. It was the first time since 2008 that megafunds â€" defined as having more than $4.5 billion in assets â€" have commanded half the market.

Of the $169 billion raised by 145 buyout funds last year, $85 billion went to megafunds, Preqin said. In 2012, when $95 billion was raised, the biggest funds received $30 billion, about 32 percent of the total.

This shift came during a resurgence in overall fund-raising last year after several years of muted activity. Buyout funds in 2013 attracted the most money since 2008, a year when they raised $230 billion, according to Preqin.

That big haul in 2008 came at the end of a private equity boom and just as the financial crisis was gathering. Megafunds raised $114 billion that year, about half of the total amount raised, Preqin said.

Now, with investors once again willing to commit large amounts of money to buyout specialists, the biggest funds are enjoying an enthusiastic reception. The average private equity fund was $1.2 billion last year, compared with $740 million in 2012 and $1.1 billion in 2008, Preqin said.

“The mega buyout funds are back in town,” said Nick Jelfs, a Preqin spokesman. “Many of those big managers are displaying really good performance in their previous funds, which started investing around the time of the crisis.”

Apollo Global Management, for example, raised an $18.4 billion fund by the end of the year, including $17.5 billion from outside investors. Amid strong demand, Apollo received approval from investors to raise the limit on the fund’s size from an earlier cap of $15 billion, ultimately gathering the largest private equity fund in its history.

Among all private equity funds ever raised, the new Apollo fund ranks fourth, Preqin said on Friday. The No. 1 spot is held by a Blackstone Group fund that closed in 2006.

Size may not be the chief reason for the capital-raising success of the biggest funds, said Antoine Dréan, the founder and chairman of the placement agent Triago.

“It’s really a question of performance and story,” Mr. Dréan said. “It’s a question of being able to demonstrate” to investors “that the money will be well managed.”

In addition, investors may perceive that the biggest funds are more reliable, Mr. Jelfs said.

“Whereas large managers may not be able to produce the highest returns, they are often a little more consistent,” he said. “I think that’s what investors are looking for.”