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US private equity firms raised record USD302bn in 2007

Despite credit market turmoil in the second half of the year, US private equity firms raised a record USD302bn in 415 funds in 2007, according to Dow Jones Private Equity Analyst, a 19 per

Despite credit market turmoil in the second half of the year, US private equity firms raised a record USD302bn in 415 funds in 2007, according to Dow Jones Private Equity Analyst, a 19 per cent increase in assets from the USD255bn raised by 404 funds during 2006.

Leveraged buyout and corporate finance funds accounted for 75 per cent of all commitments, with USD228bn raised in 182 funds, 29 per cent more than the USD177bn investors placed in this category in 2006. The year also saw the largest leveraged buyout fund ever, Blackstone Group’s USD21.7bn Blackstone Capital Partners V.

Much of the growth within the buyout fund category could be attributed to booming interest in distressed-focused funds, which saw nearly USD45bn invested in 22 funds, almost three times the previous investment record of USD16bn set in 2006.

‘With creditors tightening their belts, the days of easy financing are over and private equity investors are positioning themselves to capitalise when overextended companies fall into trouble in the months and years ahead,’ says Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst. ‘Often, the best opportunity for investors to see sizeable returns is when overall market conditions are less favourable.’

Venture capital fundraising continued to account for a much smaller portion of overall fundraising than it did during the technology boom years. In 2007, 141 venture funds raised more than USD32bn, admittedly up 19 per cent from the USD27bn raised in 136 venture funds in 2006, as late-stage strategies capture more interest.

Nearly 10 per cent of all capital invested in venture funds went to Technology Crossover Ventures, which raised USD3bn for its TCV VII fund focused on later-stage investments.

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