Study: Prviate Equity Fundraising Rises In Q2

Jul 5 2011 | 12:11pm ET

Private equity fundraising was on the rise in Q2 2011 as 120 p.e. funds worldwide reached a final close, raising a total of $66 billion.

According to a recent survey by Preqin, this number represents an increase over the $61.6 billion collected during the first quarter of 2011.

In addition to the closings, another 113 funds held interim closes during the quarter, raising $24.5 billion toward their final targets.

The Preqin study showed that funds focused primarily in the U.S. raised the most capital in Q2 2011 with 54 funds raising a total of $40.7 billion.

In terms of fund types, buyout funds led the pack, with 21 funds raising a total of $15.3 billion, including Montagu IV, which closed ahead of its EUR 2 billion target on EUR 2.5 billion. Nine secondaries funds raised a total of $9 billion, 18 real estate funds raised $11.2 billion, and 20 venture funds raised $5.8 billion.

Funds closing in Q2 2011 spent, on average, 15 months in the market—more than the 10.6 months in 2005 but down from 20.4 months in 2010.

Said Tim Friedman, senior manager and Preqin spokesman:

“Recent quarters have seen record distributions from existing investments held by private equity investors—the result of firms starting to exit investments made in the boom years of 2005—2008. As a result, investors are becoming far more active in committing to new vehicles in order to maintain their allocations to the asset class. While this isn’t yet translating into huge increases in the number and value of funds closing, in the second half of the year we are expecting to see more vehicles achieving a final close as the pace of new investment gathers momentum.

“While this is certainly encouraging news for those currently seeking capital, the sheer number of funds being raised (currently standing at 1,676) means that conditions will remain extremely competitive for the foreseeable future, with the balance of power remaining firmly with the LPs in negotiating commitments."

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