With $1 Trillion on Hand, Private Equity Set to Deal
Date: January 16, 2009
Private-equity firms have more than $1 trillion available for deal making this year after the industry achieved the second-highest level of fund raising on record last year.
Private-equity firms held final closes for 768 funds last year, raising $554 billion, according to research group Preqin. The new funds raised supplemented the uninvested capital available from earlier vehicles, bringing overall firepower to $1.02 trillion, according to Preqin. Buyout funds account for the biggest chunk of that figure, with $472 billion in available capital. The two main other private-equity fund types are venture capital and real estate.
Although private-equity firms are likely to suffer through the investments they made at the height of the market in 2006-2007, they expect to be able to secure strong returns on investments made during the economic downturn, so they have been keen to raise funds and are waiting for prices of potential targets to bottom out. Some firms have struggled to raise large funds, however, as investors are becoming nervous about committing additional capital to the asset class.
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Source: Wall Street Journal
