US fundraising drops by a quarter

US private equity firms raised $44bn in 2003, down 26 percent from $59bn raised by US general partner groups the year before 2002, according to research.

In keeping with private equity fundraising trends around the world, general partner groups based in the US, the world’s largest alternative investment market, struggled to raise fresh capital from investors last year.

 

According to research published by The Private Equity Analyst, a US-based private equity publication, US firms raised a mere $43.9 billion (€34.6bn) in 2003, 26 per cent less than the $59.4 billion raised in 2003, and 75 percent less than during the height of the technology boom in 2000.

 

Brand name private equity firms such as Sequoia Capital, which raised over $1 billion, and New Enterprise Associates, which raised $1.1 billion, were least affected by the slowdown.  

 

Other firms that enjoyed success on the fundraising trail were CIVC Partners, a fund sponsored by Bank of America, which raised $650 million; Gores Technology Group, which raised $400 million; and Wind Point Capital, which raised $476 million.

 

Particularly popular with investors were large funds investing in private equity secondaries such as CSFB Strategic Partners II and Lexington Partners V, which between them raised nearly $4bn last year.

 

Also in demand were managers of mezzanine funds. Goldman Sachs affiliate GS Mezzanine Partners alone managed to secure $2.7bn in in-house and third party commitments. The Private Equity Analyst found that mezzanine houses were the only group of private equity funds to raise more capital in 2003 than they did in 2002.

 

The research also found that investment in venture capital funds was down 20 per cent, fund of funds secured 38 per cent less capital and LBO vehicles raised 34 per cent less capital than in 2002.