Only $38 billion was raised in private equity worldwide in the third quarter of 2009, the lowest level since the fourth quarter of 2003, with the number of fund raisings abandoned more than tripling in a year, according to Preqin.
The aggregate capital raised by funds holding a final close in the third quarter of this year is the equivalent of just 45 per cent of the second quarter, and just 18 per cent of the record $208 billion raised in the second quarter of 2007.
According to Preqin, which conctacted more than 1500 funds managers around the world with a vehicle in the market regarding their fundraising status, and whether they held, or were planning to hold a close in the period to the end of September, 90 funds have abandoned their fundraising process so far this year.
This represents a significant increase from the 30 funds that abandoned fundraising in 2008 and the 14 that did so in 2007.
These results indicate that those funds, and managers, without strong track records will find it difficult in this environment.
The report points to further evidence of the challenging nature of the fundraising market in the time it is taking for fund managers to close their vehicles. In 2009 the average time spent in market has jumped to 18 months, from 15 months in 2008 and 12 a year earlier. In 2004 the average time to close was 9.5 months.
These results are consistent with the caution being exercised by most institutional investors and reflect Preqin’s August survey of 100 institutional investors which showed that just 41 per cent of limited partners had made new commitments to funds in the first half of 2009, and that these investors are investing at much slower rates than they have in the past.