Private equity fundraising hits five-year low
Private equity fundraising dropped to its lowest level in over five years during the first three months of 2009, while the number of buyout firms abandoning plans to raise fresh capital is slowly on the rise, according to new research, as investor appetite begins to mirror the flagging deal market.
A total of $45.9bn (€34.7bn) was raised for the final closes of 71 private equity funds in the first quarter of the year, according to industry data provider Private Equity Intelligence. This is the lowest quarterly figure since the final three months of 2003, when $34bn was raised.
The total compared to $125bn raised in the fourth quarter of last year.
Funds focused on the US were the most popular with investors during the first quarter, with $23bn garnered across 39 funds, making them the biggest group in terms of both number and value. Seventeen European funds attracted $20.2bn, while the same amount targeting investments in Asia and the rest of the world raised $2.7bn.
The number of abandoned fundraisings is small but rising, according to Preqin. Nine fundraisings were mothballed during the first quarter, compared to 30 for the whole of last year and 14 in 2007.
However, the number of active fundraisings has continued to rise year on year. In January this year there were 1624 funds on the road targeting $889bn, compared with 1304 funds chasing $705bn in January 2008 and 918 targeting $396bn in January 2007. By March this year, the number had risen to 1673.
Preqin said the declining number of successful fundraising closes combined with the record number of funds out in the market meant the environment for raising fresh capital was “extremely competitive”. This is leading to managers extending their fundraising processes and holding more interim closes -which allow the manager to start investing while continuing to raise money- according to the group.
--write to osmiddy@efinancialnews.com
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