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Private equity raises more funds in Q2 -survey

Published 07/01/2009, 12:40 PM
Updated 07/01/2009, 12:50 PM

* Private equity fundraising increases 28 percent in Q2

* Fundraising seen rising in 2009

* Fundraisings take longer, more funds abandoned

LONDON, July 1 (Reuters) - Global private equity houses raised more money in the second quarter compared to the previous three months as investor appetite returned, but it took them longer to raise the cash, according to consultancy firm Preqin.

The firms raised $76.2 billion -- a 28 percent increase on the first three months of the year, but still well short of the $213 billion raised in the year-ago period before the near-collapse of the banking system.

"We expect private equity fundraising to continue to grow over the course of 2009," said Preqin spokesman Tim Friedman in a statement on Wednesday.

But the time taken to raise a fund is lengthening, the survey showed, and increasing numbers of funds are being abandoned. It took an average of 18.3 months to raise a fund in 2009, up from 15 months in 2008 and 12 months in 2007.

There have been 30 confirmed cases of funds being abandoned in 2009 so far, Preqin said, already matching the figure for the whole of 2008 and more than doubling the number of shelved fundraisings in 2007.

Commitments to private equity funds slumped in the first quarter after investors found themselves over-exposed to the asset class when other parts of their portfolio had dropped in value, increasing the weighting of private equity.

But many investors remain optimistic about potential future returns from private equity and will come back as they bring their portfolios back in balance, Preqin said.

"As the global economy stabilizes we expect more investors to return to the fundraising market in order to pick up new investments," said Friedman. (Reporting by Simon Meads; editing by Mike Nesbit)

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