The number of private equity firms looking to raise funds has dropped by 10% in the second quarter of the year as fewer funds are launched and planned fund raisings are scrapped.
The global fund raising environment according to research providers Preqin did however pick up on Q1, with US$76bn raised (by 82 funds) compared to US$60bn. However, even this latest figure is the lowest quarterly report since Q1 2005.
As of July 2009, there are 1,622 funds looking for money, down from the 1,673 in March, but still significantly more than the 1,304 on the road in January 2008 and the 918 in January 2007.
Those out on the fund raising trail in July are looking for a total of US$807bn, a decrease from the US$887bn being hunted in May. It is higher than the US$705bn figure of January last year and the US$396bn the January before.
According to the Preqin, there have been 30 confirmed abandoned fund raisings so far this year, the same number for the whole of 2008. The previous year recorded 14 dumped fund raising efforts.
The Preqin report said: “The increase in capital raised indicates that investor appetite for new investments is increasing. In conjunction with the drop in number of funds in market, this will go some way to improve conditions for fund managers with funds currently in market. However, conditions do remain extremely competitive, and fund managers should expect for the fundraising process to take more time than it has done in previous years.”
Funds closed in 2009 took 18.3 months to reach that point, up from 15 in 2008 and 12 in 2007. Fund raisings in 2004 took just 9.5 months.
The US market in Q2 saw 46 funds raise US$49bn, 22 European funds raise US$24.7bn, and the rest of the world witnessed 14 accumulate US$2.4bn
Six of those European funds were buyouts, five real estate, four venture capital, four fund-of-funds, two mezzanine and one other. There were no secondaries or distressed debt funds raised.