How will the global financial crisis affect private equity fundraising over the next 12 months?
Thomas Kubr, chief executive of Zug, Switzerland-based Capital Dynamics, said:
“We have already seen fundraising slow down globally during 2008 and anticipate that activity will remain relatively stagnant over the next 12 months. Those managers that closed funds over the last year are well placed as they have generally been slow to deploy capital in line with declining M&A activity and limited pricing adjustment reflecting today’s reality. We expect these managers to invest cautiously and not return to market at the speed of recent years.
Limited partners will nurture existing key manager relationships, which will make fundraising more difficult for new managers and those whose performance appears mixed. Historically oversubscribed managers are even delaying closings into 2009 and using the time to prepare their portfolio for a challenging economic environment ahead. While we anticipate a slower fundraising environment for buyout and venture in the next 12 months, distressed, turnaround and mezzanine managers are likely to be more enthusiastic as attractive investment opportunities present themselves.”
Kubr recently shared his perspective as part of the upcoming Fundraising Compendium in sister magazine Private Equity International.