Global private equity investment totalled $55 billion in the first half of 2010, up roughly 20 percent from the $46 billion reported in the first half of 2009, according to a new report by TheCityUK, an organisation that promotes Britain’s financial and professional services.
The 2010 investment figures are on target to exceed the $91 billion recorded in a weak 2009, but remain far below the $181 billion invested in 2008.
Illustrative of the slump, private equity-backed deals accounted for just 6.3 percent of global M&A volume in 2009, the lowest level in more than a decade. The first half of 2010 saw a slight improvement in the figure to 6.9 percent, but still well below the all-time high of 21 percent recorded in 2006.
Full year figures for 2010 may show a moderate increase on 2009 if the gradual recovery in investments seen in recent months is sustained.
“Full year figures for 2010 may show a moderate increase on 2009 if the gradual recovery in investments seen in recent months is sustained,” said the report.
Challenging fundraising conditions have meant the average time taken for funds to achieve a final close more than doubled between 2004 and 2010 to nearly 20 months, with many funds closing below their original targets.
Recent incidences of funds closing below their initial targets include Emerging Capital Partners $613 million Africa Fund III, which originally went to market in 2008 with a $1 billion target; and Blackstone Group’s Fund VI, which sought $20 billion in the fall of 2008, only to later be revised down to $13.5 billion, as reported in PEO.
The report compiled public sources of data which track private equity activity. Sources included the EVCA and NVCA for venture capital information, and Thomson Reuters for buyout transactions.