Private Equity Fundraising Down in 2010

A news release said the number of funds raising capital was static, with 198 funds attracting commitments during the first half of 2010, the same as the prior year. 

“The absence of mega buyouts, which drove private equity fund-raising to new peaks a few years ago, is now keeping the total capital raised at lower levels,” said Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst, in the news release. “However, the number of funds that attracted commitments was stable over last year, signaling a recovery of sorts.” 

Buyout funds raised $21 billion across 74 funds, down 35% from $32.4 billion raised by 75 funds a year ago, as limited partners’ interest in mega funds — those targeting $6 billion and up — waned.  

According to the news release, the buyouts sector still accounted for the largest share of the capital raised although its percentage of the total pool declined to 47% from 53% in the year-earlier period. This is the first time since 2001 that buyout funds did not claim the majority of capital raised. 

Like buyouts, secondary funds and fund of funds were down from the year-earlier period. Twelve secondary funds raised $8.4 billion, a 32% drop, and 26 fund of funds raised $3.8 billion, a 55% drop from the first half of last year. 

Mezzanine funds, in contrast, had a strong first half, raising $4.4 billion for 14 funds, more than triple the $1.4 billion raised for 10 funds in the year-earlier period, the news release said. 

After a difficult year of fundraising in 2009,U.S. venture funds raised $7.5 billion for 72 funds during the first half of 2010, according to Dow Jones LP Source..