NEW YORK, July 17 /PRNewswire-FirstCall/ -- Private equity fundraising
continued to break new records in both the venture capital and buyout asset
classes in the second quarter of 2006, according to Thomson Financial and
the National Venture Capital Association (NVCA). In the quarter, fifty
venture capital funds raised a total of $11.2 billion, the highest level
since the first quarter of 2001. Thirty-five Buyout and Mezzanine funds
raised $30.8 billion.
The unusually high fundraising level this quarter was driven by several
large funds in both the venture capital and buyout asset classes. An
oversubscribed Oak Investment Partners XII raised $2.56 billion becoming
the largest venture capital fund ever raised. New Enterprise Associates 12
nearly matched this level raising $2.25 billion in the quarter. On the
buyout side, Texas Pacific Group's TPG Partners V raised $14 billion.
"While this quarter's venture capital fundraising explosion is largely
driven by a few players, we can not pretend that this isn't an incredible
amount of money to invest," said Mark Heesen, president of the National
Venture Capital Association. "It reflects a philosophy that companies need
more money and a longer runway to go public today and these larger funds
are going to support these enterprises from their infancy until their exit,
which they hope in many cases is an IPO. There are certainly smaller funds
raised this quarter that will do very well leveraging an occasional public
offering and a healthy acquisitions market for their companies. We continue
to predict that this 2004-2006 fundraising cycle will come in at around $70
billion which is far less than the $200 billion raised in the 1999-2001
cycle."
Fundraising by Venture and LBO/Mezzanine Funds, 2002-2006*
Venture Capital Buyout & Mezzanine**
Venture Buyout &
Number Capital Number Mezzanine
Year/Quarter of Funds ($M) of Funds ($M)
2002 171 3847.7 88 25731.1
2003 144 10680.2 92 29310.4
2004 201 18253.3 134 50953.1
2005 202 26530.8 175 94669.7
2006 YTD 105 17972.6 73 54383.7
2Q'05 56 7676.0 63 26446.0
3Q'05 62 5608.1 60 21677.4
4Q'05 70 8083.8 50 32491.0
1Q'06 64 6762.5 46 23575.0
2Q'06 50 11210.1 35 30808.7
Source: Thomson Financial & National Venture Capital Association
* These figures take into account the subtractive effect of downsized
funds
** This category includes LBO, Mezzanine, Turnaround and
Recapitalization-focused funds.
Fundraising by early-stage venture capital funds took the lead with
twenty-eight funds raising $5.3 billion in this quarter. In second place,
fifteen balanced funds raised $4.9 billion. New Enterprise Associates and
Oak Investment Partners fell into the early and balanced categories
respectively.
Follow-on venture capital funds continued to be the dominant
fundraisers with only eight new funds being raised in this quarter.
VC Funds: New vs Follow-On
No. of
No. of New Follow-on Total
2002 56 115 171
2003 49 95 144
2004 55 146 201
2005 49 153 202
2006 YTD 18 87 105
2Q'05 12 44 56
3Q'05 14 48 62
4Q'05 20 50 70
1Q'06 11 53 64
2Q'06 8 42 50
Source: Thomson Financial & National Venture Capital Association
Buyout and mezzanine funds continued to bring in commitments at the
traditional 3-to-1 rate over venture capital funds. This is the second
biggest quarter for US-based buyout and mezzanine funds -- the first
biggest being in 4Q 2005.
"While the number of buyout and mezzanine funds has steadily fallen
over the past year, the dollar size continues to grow," said Joshua Radler,
assistant project manager at Thomson Financial. "It appears that the mega
fund is here to stay and this liquidity will have a significant impact on
the dynamics of corporate America and the US economy in the coming year."
About Thomson Financial
Thomson Financial, with 2005 revenues of US$1.9 billion, is a provider
of information and technology solutions to the worldwide financial
community. Through the widest range of products and services in the
industry, Thomson Financial helps clients in more than 70 countries make
better decisions, be more productive and achieve superior results. Thomson
Financial is part of The Thomson Corporation (http://www.thomson.com), a global
leader in providing integrated information solutions to more than 20
million business and professional customers in the fields of law, tax,
accounting, financial services, higher education, reference information,
corporate e-learning and assessment, scientific research and healthcare.
With revenues of US$8.50 billion, The Thomson Corporation lists its common
shares on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).
The National Venture Capital Association (NVCA) represents
approximately 480 venture capital and private equity firms. NVCA's mission
is to foster greater understanding of the importance of venture capital to
the U.S. economy, and support entrepreneurial activity and innovation.
According to a 2004 Global Insight study, venture-backed companies
accounted for 10.1 million jobs and $1.8 trillion in revenue in the United
States in 2003. The NVCA represents the public policy interests of the
venture capital community, strives to maintain high professional standards,
provides reliable industry data, sponsors professional development, and
facilitates interaction among its members. For more information about the
NVCA, please visit http://www.nvca.org.
SOURCE Thomson Financial; National Venture Capital Association
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Related links:
http://www.thomsonfinancial.com
http://www.nvca.org
CONTACT:
Emily Mendell of NVCA, +1-610-565-3904,
emendell@nvca.org; Joshua Radler of Thomson Financial,
+1-646-822-7323, Joshua.radler@thomson.com
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