Global PE funds raise just $41.3 bn in Q2 2010

Though private equity fund raising across the globe touched a seven-year low of $41.3 billion during the April-June quarter, hope is just around the corner, a report by research firm Preqin has said.

Providing the proverbial silver lining to the dark cloud, the report stated that the situation is likely to improve in the coming days with fund managers making fresh portfolio allocations.

"The $41.3 billion collected by the global private equity industry from 82 final fund closes in Q2 2010 is the lowest since 2003, and is a reflection of the continuing harsh fund-raising conditions for managers seeking capital," Preqin said.

There were a total of 82 funds, which achieved a final close worldwide in the second quarter of this year, raising an aggregate $41.3 billion in capital. During the same quarter in 2009, as much as $76 billion was raised.
    
During the first quarter of 2010, global private equity fund-raising stood at about $60 billion.
    
The report said that in the longer term, over a third of the investors were looking to increase allocations (36 per cent), indicating that fund-raising would be set to increase substantially as we move into the second half of 2011.
    
"With the market conditions improving, the churn of capital is starting to pick up, and this will have a positive impact on new fund-raisings as investors seek to reinvest distributed capital," Preqin said.
    
An analysis of the 12-month rolling fund-raising for the global private equity industry revealed that a majority (76 per cent) of the investors would be looking at maintaining their allocations to private equity, 19 per cent looking at increasing, and 6 per cent looking at decreasing their commitment levels.
    
In a survey of 100 conducted by Preqin in June 2010, 65 per cent of those polled indicated that they would be making a commitment in the second half of 2010.
    
Interestingly, funds focusing on the US raised the most capital in the second quarter of 2010 with 46 vehicles gathering $24.3 billion, while 19 Europe-focused funds raised $8 billion and 17 funds focused on Asia and the rest of the world raised $9 billion.
    
In terms of type, buyout funds were most popular, with 14 funds raising an aggregate $13.9 billion. A total of five infrastructure funds raised an aggregate of $6.1 billion, a total of $5.9 billion was raised by 15 real estate funds, and $4.4 billion was raised from 24 Venture funds.
    
A recent piece of Preqin analysis indicated that fund-raising was taking an average time of 19.8 months in 2010, double of that taken in 2004.