New Delhi: Global private equity fund raising has surged 28% to $76.2 billion in the second quarter of 2009 on the back of an increased investor appetite for new investments.
“Fund raising in Q2 2009 represents a significant improvement from Q1 2009, with 82 funds raising an aggregate $76.2 billion,” a report by global research firm Preqin said.
Private equity fund raising in the April-June quarter of 2009 showed signs of recovery and touched $76 billion scaling 2005 levels. In the first quarter of 2009 PE firms had raised $59.6 billion.
“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,” Preqin said.
So far this year the level of capital available to the fund managers has fallen and many investors are not currently able to invest at all while others are committing less capital than in previous years.
“We expect private equity fund raising to continue to grow over the course of 2009, although, it may still be some time before the levels that we experienced in recent years are seen again,” Preqin spokesperson Tim Friedman said.
Many PE investors are optimistic about the potential future returns for the new funds that are able to take the advantage of favorable valuations in the current market.
However, conditions do remain extremely competitive and fund managers should expect the fund raising process to take more time than it has done in previous years, Preqin said.
“Although negative, private equity returns did not experience quite as dramatic a fall as the public markets, continuing the industry’s longstanding history of being a top-performing asset class,” Friedman said.
The June quarter saw buy-outs accounting for the highest amount raised as 18 funds together mobilized $33.9 billion followed by ‘natural resources´ raising an aggregate of $9.9 billion and real estate funds mobilising $8.9 billion.