The public financial markets may be in crisis, but US private equity firms not only continue to stockpile capital but have picked up the pace of their fundraising, according to Dow Jones P
The public financial markets may be in crisis, but US private equity firms not only continue to stockpile capital but have picked up the pace of their fundraising, according to Dow Jones Private Equity Analyst, which says firms raised USD222.6bn for 264 funds during the first nine months of this year.
Despite a slowdown in buyout fundraising, this total is 11 per cent ahead of the USD200.4bn raised by 298 funds by the end of September 2007 and stands in contrast to the midway point of the year, when fundraising slightly lagged last year’s pace. The full-year fundraising record of USD313bn was set in 2007.
‘Limited partners have been saying that they intend to invest in private equity at a steady pace through the current downturn,’ says Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst.
‘Many of these investors have learned their lesson after the venture bubble burst in 2000. Back then, many stopped investing in private equity, only to miss out on some of the best vintage years the industry has yet produced. This time around, they continue to invest, but they’re being very careful about which strategies they invest in.’
Distressed firms, which are included in the buyout/corporate finance category, are seeing strong interest from investors with 18 funds raising USD37.9bn so far this year, up 28 per cent from USD29.5bn raised by 16 funds at the same stage of 2007. Distressed firms raised a record USD48.2bn throughout the whole of last year.
Oaktree Capital Management set a new record for the largest individual distressed fund by raising USD10.6bn for OCM Opportunities Fund VII earlier this year.
Mezzanine investment has gathered USD36.9bn for 13 funds, compared with just USD3bn in nine funds in the first three quarters of 2007. Goldman Sachs accounts for the lion’s share of this year’s total, having raised a whopping USD20bn, including USD7.5bn in the form of leverage, for GS Mezzanine Partners V.
‘Were it not for the distressed and mezzanine segments, private equity fundraising would have been weaker than last year,’ Rossa says. ‘Buyout fundraising continues to lag and fresh concerns about the availability of debt won’t help.’
The corporate finance and industry-focused buyout segments collectively saw 78 funds raise USD103.3bn, down 12 per cent from the USD118bn raised by 98 funds last year. TPG Capital boosted the numbers in the third quarter with the raising of an additional USD7.8bn for TPG Partners VI, bring its total for the fund to USD19.8bn so far this year. The firm also collected USD6bn for TPG Financial Partners.
Venture capital fundraising is holding relatively steady, up just 3 per cent to USD19.7bn for 103 funds compared with USD19.1bn raised by 103 funds at the same point of 2007.
