Editor's letter

This month's focus is on fundraising: the lifeblood of private equity and a part of the industry that has had change forced upon it. As the various articles that make up our coverage were researched, we were reminded that many general partner groups have become acutely more aware of the need to manage their relations with both existing limited partners and prospective investors far better. LPs have become more inquisitive – GPs will call it demanding – and are now applying more rigorous criteria to their fund selection process.

At the same time, GP groups have had to wrestle with existing funds where too much of the portfolio remains unrealised – leaving their recent track record seem more form than substance. But the increased rigour of investors' due diligence and an increase in exit activity (both a result of improved market conditions and GP pragmatism) have helped make fundraising become less opaque and unstructured: 2004 will be looked back on as the year when the process of raising a fund could officially be described as having matured. The special starts on p. 41.

Elsewhere in this issue you will find another of our ever-popular roundtables: we took the shuttle to Boston to meet up with some of the area's leading healthcare and life science VCs and asked: “Is there light at the end of the tunnel?” “What tunnel?” came the reply. Clearly certain parts of the venture space are more benign than others.

In Privately Speaking we sat down with Joanna James of Advent International who has deliberately and diligently explored the region for opportunities since 1995. Now that a number of the key states in the region are joining the EU in a few weeks time, many more private equity investors are recognising its potential. Expect investment activity in that region to intensify.

Which is just one more reason why more private equity funds are being raised at praised: there's not just renewed appetite amongst investors, there are plenty of deals to be done as well. Spring is upon us.

Philip Borel

Managing Editor