According to a new report from 3i Group Plc and PricewaterhouseCoopers, North America led the pack with about 70% of total fund raising, buoyed by pension fund investments. Of the $157 billion in funding raised in North America, about $126 billion was actually invested, according to the report.
However, the report also cautioned that the amount of private equity invested in North America this year is expected to shrink to a mere $30-$35 billion this year. While considerably lower than last year, that is still more than was invested in 1998.
Ironically, the steep fall off in equity markets has reduced both the size of and allocation to alternative investments. At the same time, the number of private equity funds has grown, making competition for profitable deals tougher and returns smaller. The combination has also made private equity a less compelling investment, the report found.
Large pension funds, endowments and others allocate as much as 15% of their total assets to private equity firms, including venture capital, hedge funds and buyout firms.