Private Equity Fund Raising

Private Equity Fund Raising Drops 64% from 2008

The word "plummets" has been used repeatedly to describe the latest results from a report on private equity fundraising. During the first half of this year 173 private equity funds rounded up $54.9 billion, a far cry from the $152.7 billion that 261 funds raised during the same time period in 2008. This marks a 64% decline year-over-year.

Private-equity firms continue to struggle to raise funds as the recession wears on, according to a report today in the Dow Jones Private Equity Analyst newsletter.

During the first six months of 2009, 173 private-equity funds raised $54.9 billion, down from the $152.7 billion raised by 261 funds during the first half of 2008, representing a 64% decline, the report said. Institutional and individual investors are turning away from the asset class hoping for safer but smaller returns from traditional investments.

Some are even selling off their current capital commitments in the secondary market. Secondary funds are pooling their own capital to buy shares in private equity funds--stakes that some limited partners can't wait to sell off, often for a loss. In contrast to the low fundraising numbers for private equity funds, 18 secondary funds accumulated $13.9 billion, a new annual record.

The venture capital fundraising industry was especially hurt with a 63% drop.

“LPs have been cautious about all illiquid asset classes since Lehman collapsed in September,” said Kelly DePonte, partner at placement agent Probitas Partners Inc. “Many LPs we talked to said as early as last December that they planned to sit on the sidelines through the second quarter, and that is exactly what we have seen.”

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To learn about private equity activity for the first half of 2009, read Private Equity Activity 2009
To read about venture capital fund raising in 2009, check out Venture Capital Fund Raising



Tags: Private equity fund raising, private equity funds, private equity fundraising, private equity data, private equity news, venture capital fund raising

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