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US private equity fundraising plummets 68 per cent in 2009

The US private equity industry saw 331 funds raise USD95.8bn in 2009, down 68.1 per cent from the USD299.9bn raised by 508 funds in 2008, according to figures from Dow Jones LP Source.

With the lone exception of secondary funds, every sector experienced sharp slowdowns. This is the first year since 2003 that private equity firms raised less than USD100bn.

There were a few stars that stood out amidst the fundraising gloom. The brightest was Hellman & Friedman, which took in USD8.8bn – all in 2009 – for Hellman & Friedman Capital Partners VII. In venture, Charles River Ventures and Matrix Partners both turned in oversubscribed funds.

Buyout firms, while still constituting the biggest slice of the capital pie, raised just USD53.7bn across 133 funds, a 72.5 per cent drop from the USD195.5bn raised by 204 funds in 2008. 2009 was the slowest year since 2003.

Mega funds – defined as funds of USD6bn or more – for the most part had a tough time raising money in 2009. Just six such funds raised USD14bn, accounting for 26 per cent of buyout fundraising. The year before, 12 vehicles raised USD75.2bn, accounting for almost 40 per cent of the market.

Venture firms had it almost as tough as buyout firms in 2009 as VC fundraising fell 54.6 per cent to USD13bn across 120 funds from the USD28.7bn collected by 204 funds in 2008. It was the slowest year since 2003 for the sector.

The secondary market was the only sub-sector of private equity to turn in a strong performance. The USD17.5bn collected by 21 secondary funds in 2009 is up 57 per cent from 2008 and set a new record.

Distressed and mezzanine funds fell along with the rest of the private equity market. Distressed firms, which are counted as a sub-sector of buyouts, raised USD14.2bn across 30 funds, a 66.9 per cent drop from a record-breaking 2008. Mezzanine funds raised just USD3.3bn across 20 funds, down 92.4 per cent from USD43.1bn raised by 24 funds in 2008.

Funds of funds raised a total of USD8.3bn across 37 funds, a 64 per cent drop from the USD23bn raised by 55 funds of funds in 2008.

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