Private Equity Funds In US Raised In Q1 2009 Which Is 81 Percent In Comparison With The Last Year

US private equity funds raised just $15.5 billion in the first quarter of 2009, a huge drop of 81% from the $82.7 billion raised in the same quarter last year, and the lowest quarterly amount raised since 2004, according to

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US private equity funds raised just $15.5 billion in the first quarter of 2009, a huge drop of 81% from the $82.7 billion raised in the same quarter last year, and the lowest quarterly amount raised since 2004, according to research by Dow Jones Private Equity Analyst. Last year, private equity firms raised a total of $287.5 billion, second only to the record $343.3 billion raised in 2007.

“As expected, private equity fundraising in the first quarter proved very difficult,” says Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst. “Due to declines in other parts of their portfolios, many investors have passed their private equity target allocations, so they are taking a wait-and-see approach before committing more capital to the asset class. They are also waiting to see just how poor the performance of their existing private equity investments will be this year.”

According to the research, 26 LBO and corporate finance funds raised just under $12.1 billion in the first quarter of 2009, down 75% from the more than $49 billion raised by 52 of these funds during the same period last year. Nearly half of this capital, some $6 billion, went to a single buy-out fund: Hellman & Friedman’s Capital Partners VII fund, which is still open with a target of $10 billion.

The venture capital industry saw 23 funds raise just shy of $2.4 billion in the first quarter, a 64% drop-off from the nearly $6.7 billion invested in 57 venture funds last year.

Unlike the first quarter of 2008, which saw nearly $27.1 billion, with $20 billion going to a single record-sized mezzanine fund, put in more niche and diverse asset categories, this most recent quarter saw scant investment in mezzanine funds ($461 million in three funds), secondary funds ($499 million in three funds) and funds of funds ($132 million in two funds).

“Investors are questioning firms over the quality of their returns much more intensely, and are putting money to work primarily with trusted fund managers,” says Rossa.

D.C.

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