Despite the global credit crunch and rising oil prices, private equity fundraising has not lost much of its steam in the US. According to a report by Dow Jones Private Equity Analyst, the U.S. private equity firms raised $132.7 billion across 185 funds in the first six months of 2008, which is just 3 per cent lower than the $137.2 billion raised by 199 funds during the first half of 2007.

On the other hand, the amount of funds raised by European private equity firms saw a 16 per cent jump to $61.1 billion invested in 80 funds, as compared to the $52.5 billion invested in 81 funds during the same period last year. Buyout funds accounted for nearly 90 per cent of Europe’s fund-raising total.

The differing fortunes of European private equity funds are an indication that limited partners are shifting some attention away from the U.S., where the economy is seen as particularly weak and where many of LPs are over-concentrated,” said Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst.

Another interesting trend pointed out by the report is that venture capital fund-raising in the US has increased by 15 per cent to $11.5 billion raised by 72 funds from $10 billion raised by 62 funds last year. Lightspeed Venture Partners raised the largest venture capital fund, christened Lightspeed Venture Partners VIII LP fund, at $800 million.



LBOs Affected

Leveraged buyout (LBO) fund-raising has seen a major decline of 20 per cent as compared to the same period last year as firms raised only $85.5 billion across 75 funds in the first half of 2008, down from $107.6 billion raised in 91 funds. Seven mega firms (firms raising greater than $6 billion) have raised $36.6 billion only a bit lower than last years $37.4 billion.

Mezzanine fund-raising set a new first half record with $24 billion raised by seven firms. This record is mainly due to Goldman Sachs Capital Partners’ record $20 billion GS Mezzanine Partners V LP fund, which includes $7 billion of leverage.

The record for fundraising, which is $313 billion, was achieved last year. “For first time since 2003, we’ve seen year-over-year fund-raising actually decline as some of the bigger firms — Blackstone Group, Carlyle Group, and Madison Dearborn Partners — ran into delays raising capital for their latest buyout funds,” said Rossa.

Blackstone Group had delayed first close on its fund to June, which is targeting $20 billion, and it seems to have gotten further delayed. Carlyle has delayed final closure on its $15 billion fund until the end of the year from May 30. Madison Dearborn Partners, which is seeking $10 billion, also delayed its first close. If these funds would have made their closings on time, a new record would have certainly been achieved. Warburg Pincus LLC, which closed the largest buyout fund of the first half with its $15 billion Warburg Pincus Private Equity X LP.

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