October 2009
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Global PE fund raising in Q3 down to 5-yr low

Fund raising by global private equity funds has dipped to an over five-year low of $38 billion in the third quarter of 2009, as fund managers are refraining from making any new commitments before next year.

Fund raising in Q3 2009 represents a 55 per cent slump from Q2 of 2009, when the PE funds had raised an aggregate $84 billion globally, according to a report by global research firm Preqin.

Private equity fund raising plummets to lowest levels since 2003, with the third quarter figures equivalent to just 45 per cent of the $84 billion raised in Q2 2009, Preqin said.

“Many of the funds that are closing are doing so short of target, and we have seen a number of fund managers putting their fund raising efforts on hold until 2010, or abandoning them altogether for the foreseeable future,” Preqin spokesperson Tim Friedman said.

However, the report noted that the investment shift from the private equity asset class is only short term and the institutional investors would pull back again in the final quarter of this year and in 2010.

“Our recent survey of institutional investors in the sector would suggest that the latter is the case, with a whole swathe of significant private equity partners readying themselves to re-enter the market in the final quarter of this year and into 2010,” Friedman said.

Source: Business Standard

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