Australian fundraising drops 74%

Australian private equity fundraising has fallen due to fewer new managers setting up shop, as well as the effects of the financial crisis.

In the 12-month period ending 30 June 2009, Australian private equity and venture capital firms raised a total of A$1.54 billion ($1.4 billion; €950 million), a decline of 74 percent as compared to the A$5.94 billion raised in the preceding period.

The amount raised was at par with 2004 levels, according to the AVCAL 2009 Yearbook, published by the Australian Venture Capital and Private Equity Association (AVCAL) in partnership with Ernst & Young. Of the A$1.54 billion raised by Australian managers, the amount raised by private equity firms totaled A$1.28 billion with the remainder raised by venture capital funds.

The decline in the capital raised reflects the impact of the global financial crisis and the lower number of new funds established over the past two years following intensified fundraising to capitalise on the end of the economic boom, AVCAL said.

In March, Catalyst Investment Managers closed its second fund on A$438 million, short of its $800 million target. In November 2008, venture capital firm Starfish Ventures raised $185 million for its third fund.

Some other firms presently in the market include CHAMP Private Equity, which is targeting A$1.5 billion for CHAMP III Funds and saw a first close on A$400 million in September; Pinnacle Private Equity, which is targeting commitments of A$300 million; and Gresham Private Equity, which is targeting A$600 million for its third fund.