During the third quarter of 2011 a 45 per cent dip in private equity fundraising was recorded, with 97 funds raising a total of $44.8 billion (£29 billion), compared with $82.8 billion from 175 funds in the first quarter of the year.
The study, by research provider Preqin, finds that funds primarily focusing on North America raised the most capital during the three months to 30 September, with Europe-focused funds raising $11.3 billion.
Private equity fundraising has been ‘extremely challenging’ in the third quarter of 2011, says senior manager at Preqin, Helen Kenyon, with September particularly slow.
Kenyon adds: ‘Although we anticipate the latest quarterly fundraising figures to improve by around 10-20 per cent as more information becomes available, fundraising in Q3 2011 is still set to fall short of the level seen in Q2.
‘While recent market uncertainty and declines in deal flow have had an impact on the investment plans of institutional investors towards private equity in the immediate term, few have changed their plans for investing in the asset class over the next 12-18 months.’
The new research shows that buy-out funds raised the most capital in the third quarter, with 19 funds raising $19.4 billion. Additionally the time taken to close funds rose from 11.4 months to 17 months.
Kenyon notes that two-thirds of investors participating in the study intend to make commitments to private equity funds in the following 12 months, a finding she states shows caution but a desire to remain active.
However she adds: ‘Many firms are currently competing for investor commitments. 1,728 funds are seeking capital at present, more than has been seen at any point in the past couple of years, and is set to remain extremely difficult for managers to stand out in this crowded market.’