U.S. Private Equity Firms Raise $265.6 Billion in 2008, 18% Less Than 2007 as Fund-Raising Pulls Back in 4Q
January 08 2009 - 8:00AM
PR Newswire (US)
Dow Jones Private Equity Analyst: U.S. Firms Raise $40 Billion in
4Q08, Down 60%; Fund-Raising May Decline Further As Firms Cut Fund
Sizes, Delay Closings NEW YORK, Jan. 8 /PRNewswire/ -- After three
strong quarters of resistance, private equity fund-raising slowed
to a virtual standstill in the fourth quarter of 2008, according to
analysis released today by Dow Jones Private Equity Analyst. Based
on statistics from the LP Source database
(http://www.privateequity.dowjones.com/), the newsletter reports
that 99 funds raised approximately $43 billion in the fourth
quarter, down significantly from the nearly $100 billion raised by
208 funds during the same period in 2007. Overall, 363 U.S.-based
private equity funds raised $265.6 billion in 2008, 18% below the
recorded $325.8 billion raised by 506 funds in 2007. "The drop in
fund-raising we saw in the 4th quarter marked a dramatic reversal
from the first three quarters of the year, when private equity
firms had been running slightly ahead of 2007's fund record pace,"
said Jennifer Rossa, Managing Editor of Dow Jones Private Equity
Analyst. "While 2008 was still easily the second-best year on
record, the decline we saw in the most recent quarter may steepen
in the coming months, as some large buyout shops are considering
fund size cuts and many limited partners are going to have trouble
finding money to commit." U.S. Private Equity Fundraising, 2008 v.
2007 2008 2007 No. of Amounts (MM) No. of Amounts (MM) % Funds
Funds Change Buyout/Corp. Finance 143 $180,962 222 $244,606 -26
Mezzanine 17 $40,202 18 $8,914 +351 Venture Capital 150 $24,729 182
$33,085 -25 Funds of Funds 34 $12,943 70 $28,699 -55 Secondary
& Other 19 $6,732 14 $10,444 -36 TOTAL 363 $265,568 506
$325,748 -18 Source: Dow Jones LP Source Economic Pains Felt Across
Most of Private Equity Industry According to Dow Jones Private
Equity Analyst, very few areas of the private equity industry have
proved immune from the economic crisis triggered by the Lehman
Brothers bankruptcy in early September. In particular, the buyout
industry has seen its problems compound with fund-raising down 26%
from $244.6 billion across 222 funds in 2007 to $181 billion across
143 funds in 2008--on par with levels seen in 2006. At the
nine-month mark, the buyout sector was only down 3% year-over-year.
For the first time in many years, buyout firms' proportion of
overall fund-raising declined, from 75% in 2007 to 68% in 2008.
Venture capital fund-raising, which had been up by around 4% at the
end of the third quarter, also saw a drop-off by the end of the
year. Venture firms raked in $24.7 billion across 150 funds in
2008, down 25% from $33.1 billion raised by 182 funds in 2007. This
also marks the lowest fund-raising total for the venture industry
since 2004. Mezzanine fund-raising was the lone bright spot, as
fund-raising in this sector soared to record heights on the back of
Goldman Sachs Capital Partners' $20-billion GS Mezzanine Partners V
LP fund. Funds of funds and even secondary funds, normally
considered well-positioned to benefit from market chaos, posted
weak fund-raising totals, down 55% and 36%, respectively. To learn
more about Dow Jones Private Equity Analyst, view a sample issue or
subscribe, visit http://www.privateequity.dowjones.com/ or call
(877) 633-8663. ABOUT DOW JONES Dow Jones & Company
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