Dow Jones Private Equity Analyst Finds Less Money Going to U.S. LBO Funds,
Jump in Venture Capital Funds; Investment in European Funds Grows 24%
NEW YORK, April 7, 2008 /PRNewswire/ -- In the first quarter of 2008,
U.S. private equity firms raised $58.5 billion in 81 funds, up nearly 32%
over the $44.3 billion raised in 68 funds during the first quarter of 2007,
according to industry newsletter Dow Jones Private Equity Analyst. Last
year's full-year record now stands at $309 billion.
The largest fund raised in the quarter wasn't a buyout fund. Instead,
it was Goldman Sachs Capital Partners' GS Mezzanine Partners V LP, which
accounted for nearly one-third of all capital raised in the quarter with
$20 billion -- a record for a mezzanine investment fund.
Correspondingly, leveraged buyout (LBO) fund-raising fell 22% to $27.6
billion raised by 33 funds in the first quarter from $35.2 billion raised
by 34 funds a year ago. While a number of large buyout funds are in the
market, it is now taking them longer to close their funds.
"These figures aren't really too surprising," said Jennifer Rossa,
managing editor of Dow Jones Private Equity Analyst. "The shakeup in the
credit markets has slowed the pace of buyout deals. That's making it harder
for large firms like Blackstone Group to justify raising big new funds."
U.S. Private Equity Fundraising, 1Q08 v. 1Q07
1Q2008 1Q2007
No. of Funds Amounts(MM) No. of Funds Amounts(MM)
Buyout/Corporate Finance 33 $27,624 34 $35,209
Mezzanine 4 $22,271 1 $67
Venture Capital 32 $4,972 22 $3,842
Funds of Funds 6 $2,354 7 $999
Secondary & Other 6 $1,231 4 $4,207
TOTAL 81 $58,452 68 $44,324
Other private equity strategies that are less dependent on the credit
markets did better. Venture capital funds in particular saw a big increase
in activity in the first quarter of 2008 with 32 funds closed, 10 more than
last year. They also raised 29% more capital compared to the first quarter
of 2007 with just under $5 billion.
"With the big buyout funds no longer taking up all the attention of
private equity investors, other strategies like venture and mezzanine are
gaining ground," said Ms. Rossa.
According to the newsletter, WL Ross & Co. LLC closed the largest
buyout fund of the first quarter with its $4 billion WLR Recovery Fund IV
LP, which is focused on distressed debt opportunities. The largest venture
capital fund belonged to Essex Woodlands Health Ventures, which raised $800
million for its Essex Woodlands Health Ventures VIII LP fund.
Number of European Funds Drops, Investment Rises 24%
European private equity firms also saw an upswing in investment in the
first quarter of 2008 with nearly $17.3 billion invested in 38 funds, a 24%
increase over the nearly $14 billion invested in 47 funds over the same
period last year.
European Private Equity Fundraising, 1Q08 v. 1Q07
1Q2008 1Q2007
No. of Funds Amounts(MM) No. of Funds Amounts(MM)
Buyout/Corporate Finance 21 $15,754 17 $7,339
Mezzanine 2 $232 2 $360
Venture Capital 13 $1,124 20 $1,997
Funds of Funds 2 $161 6 $1,386
Secondary & Other 0 $0 2 $2,896
TOTAL 38 $17,271 47 $13,979
Most of the increase in European buyout fund-raising came from one big
fund, Bain Capital's new European fund, which closed at roughly $4.8
billion during the first quarter.
Ms. Rossa added: "European buyout fund-raising numbers also got a boost
from several funds targeting Eastern Europe and Russia, where opportunities
for buyouts are still seen as strong."
For more information about Dow Jones Private Equity Analyst, to view a
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522-8663.
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