Global PE fund raising down in Q3

Global PE fund raising down in Q3

Fund raising in Q3 2009 represents a 55 per cent slump from Q2 of 2009, when the PE funds had raised an aggregate US$84 billion globally, according to a report by global research firm Preqin.Private equity fund raising plummets to lowest levels since 2003, with the third quarter figures equivalent to just 45 per cent of the US$ 84 billion raised in Q2 2009, Preqin said.

“Many of the funds that are closing are doing so short of target, and we have seen a number of fund managers putting their fund raising efforts on hold until 2010, or abandoning them altogether for the foreseeable future,” Preqin spokesperson Tim Friedman said. However, the report noted that the investment shift from the private equity asset class is only short term and the institutional investors would pull back again in the final quarter of this year and in 2010.

Over the year the number and aggregate fund raising target has dropped considerably, primarily due to a slowdown in launches of fund raising programmes, plus an increase in the number of funds being abandoned.

The number of funds on road till date stands at 1,574 with an aggregate target of USD 754 billion, down from 1,622 funds targeting to raise an aggregate US$ 807 billion at the end of July 2009.

So far in 2009, 90 funds have abandoned their fund raising process – a significant increase from the 30 funds abandoned in 2008 and the 14 abandoned in 2007, Preqin data showed.
“These fund raising statistics are clearly very poor, but not unexpected. Institutional investors are not making new commitments”, he said.