Money-Raising For Private Equity Slowed In First Quarter - Preqin

Tom Burroughes

14 April 2011

Money-raising for private equity funds around the world hit the lowest levels since the third quarter of 2009, with only $42.3 billion in funds raised in the first three months of this year, compared with $76.7 billion a year ago, according to the research firm Preqin.

In its quarterly report on aggregate fundraising and the number of funds on the road, Preqin said that fundraising was at the lowest level than at any time in the previous three years.

The figures suggest that fears about the economic outlook are hurting appetite to raise fresh funds for the private equity sector, which boomed in the years immediately before the 2008 financial crisis.

Some 12 funds have closed in the first quarter having raised $1 billion or more, led by EnCap Energy Capital Fund VIII, run by EnCap Investments, raising a total of $3.5 billion. The energy sector has been lively in recent months amid developments such as high oil prices. In second place is a buyout fund, Golder Thoma Cressey Rauner X, managed by GTCR Golder Rauner, raising $3.25 billion. Both funds are focused on the US market.

When broken down by type of funds, there were 20 buyout funds raising a total of $12.6 billion in the first quarter and 27 venture capital funds raising a total of $9.4 billion of funds, highlighting the individually larger size of typical buyout funds at present.

The average length of time funds take to raise capital fell slightly, however. Funds are currently taking an average 16.1 months to reach a final close, down from last year’s average length of 20.4 months.