The global private equity industry raised US$554bn in 2008, the second highest sum in history, but still less than 2007.
The latest data from Preqin reveals 768 funds reached final close last year, the lowest number since 2004.
Preqin estimates this means private equity funds have over US$1trn of uncalled capital at their disposal, with buyout funds accounting for US$472bn of this, and most of the dry powder – US$262bn – lying in the US. Europe is predicted to have US$165bn and Asia and the rest of the world a combined US$45bn.
Venture capital accounts for US$138bn, real estate US$196bn and other fund types, including real estate and turnarounds, US$209bn.
The fund raising figures for 2008 show a dramatic drop-off in the second half of 2008, with H1 recording 461 funds raising US$346bn, and the closing six months registering 307 raising US$207.6bn.
Tim Friedman, Preqin spokesman, said: “Fund raising has undoubtedly been affected by the turmoil in the global economy in the latter half of 2008. However, although the number and value of funds being raised has fallen significantly, fund raising has far from ground to a halt, with over 300 funds successfully raising over US$200bn in commitments in the second half of the year. In addition, 47% of funds currently still raising have already held an interim close, and are therefore relatively likely to be closing in the coming year – indicating a good momentum in the fund raising market.”
Buyout funds were the main recipients, with 170 attracting US$216bn, then real estate, where 166 funds captured US$116bn. Venture capital had 216 vehicles on the road, and together they bagged a total of US$49.4bn. Distressed funds raising US$42.5bn, spread across 23 funds.
Friedman continued: “Although many investors are currently not in a position to be making new investments, we expect that as market conditions settle, and once FASB 157 has taken effect and is reflected in GP’s performance figures, investors will be able to better understand their current position with regards to their private equity allocations, and many will be able to re-enter the market. However, in many cases the scale and size of investments will have been cut back, and there will not be enough capital available to fulfil the fundraising objectives of all managers currently on the road.”