PE Fundraising Declines To Six-Year Low
An imbalance in asset allocations has diminished investor appetite for new fund commitments.
April 1, 2009
Private equity fundraising has declined to a six-year low because of lackluster institutional investor demand, according to London data provider Preqin.
There were 73 global funds that raised $45.9 billion in the first three months of the year, and 39 U.S.-centric funds that secured $23 billion in commitments. The second-lowest amount of capital raised by private investors occurred in the fourth quarter of 2003, when 131 investment funds secured $34 billion.
“The slowdown in fundraising in Q1 2009 has been dramatic, but not unexpected," said Tim Friedman, a spokesman for Preqin.
An imbalance in asset allocations on the part of institutions ranging from endowments to pension funds has diminished investor appetite for new fund commitments.
Friedman, though, expects that institutional investors that have delayed making commitments to new funds will return to the market this year. "We predict that fundraising levels will increase throughout the year as a result."
Even so, he said that many investors may not fully commit capital for new funds until 2010.
In the meantime, private equity managers don't appear to be paying attention to reticence on the part of their limited partner investors. Through March, 1,673 private equity funds were aiming to raise new capital.
Global buyout funds accounted for the most capital raised in the first quarter, or $22.7 billion from 15 funds, followed by $13 billion garnered by 22 real estate investment vehicles.
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