The US saw 57 private equity funds raise just USD15.5bn in the first quarter of 2009, a staggering 81 per cent drop from the first quarter a year ago and the lowest quarterly amount rai
The US saw 57 private equity funds raise just USD15.5bn in the first quarter of 2009, a staggering 81 per cent drop from the first quarter a year ago and the lowest quarterly amount raised since 2004, according to Dow Jones Private Equity Analyst.
Last year, US private equity firms raised a total of USD287.5bn, second only to the record USD343.3bn raised in 2007.
"As expected, private equity fundraising in the first quarter proved very difficult,’ says Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst. ‘Due to declines in other parts of their portfolios, many investors have passed their private equity target allocations, so they are taking a wait-and-see approach before committing more capital to the asset class. They are also waiting to see just how poor the performance of their existing private equity investments will be this year.’
According to the newsletter, 26 leveraged buyout and corporate finance funds raised just under USD12.1bn in the first quarter of 2009, down 75 per cent from the more than USD49bn raised by 52 of these funds during the same period last year. Nearly half of this capital-some USD6bn-went to a single buyout fund, Hellman & Friedman’s Capital Partners VII LP fund, which is still open with a target of USD10bn.
The venture capital industry saw 23 funds raise just shy of USD2.4bn in the first quarter, a 64 per cent drop-off from the nearly USD6.7bn invested in 57 venture funds last year.
Unlike the first quarter of 2008, which saw nearly USD27.1bn-with USD20bn going to a single record-sized mezzanine fund-put in more niche and diverse asset categories, this most recent quarter saw scant investment in mezzanine funds (USD461m in three funds), secondary funds (USD499mn in three funds) and funds of funds (USD132m in two funds).
"Investors are questioning firms over the quality of their returns much more intensely, and are putting money to work primarily with trusted fund managers," adds Rossa.
