More Than 1,800 Private Equity Funds Raising Money in January, But Capital Coffers Still Relatively Full, Report Says

One big uncertainty for the year ahead is the health of the private equity fundraising market. After all 2011 wasn’t what you might call the best of times.

But then, it is not as if the industry really needs the money, as strange as that sounds. Here is a calculation I came across this morning to reinforce the point.

Buyout, venture and real estate funds have $681 billion of “dry” capital ready to deploy if the opportunities arise, according to a study from Preqin. A pretty healthy sum. (Details are below.)

Still, a record number of funds are on the road seeking capital – more than 1,800 in January, Preqin says in a fundraising report released this week. In other words, the market is crowded and will remain so especially if exit markets bottle up again and firms can’t show new distributions to their LPs.

Still Preqin finds the fundraising outlook fairly positive. One reason is that 62% of funds raised in 2011 met or exceeded their targets. This is the highest proportion since the peak of the 2007 private equity boom, Preqin says. Of course some funds have reduced their goals to more realistic targets. And only the firms with the best track records have tied the new money knot.

Yet consider this as well. The average time spent raising money last year was 16.7 months, the shortest average time for fundraising since the financial crisis hit in 2008. It could reduce again this year.

Last year, 635 private equity funds raised a total of $272.9 billion worldwide, compared with $306.2 billion in 2009 and $274.9 billion in 2010. Let’s see where we go this year.

Here are the details on available capital from Preqin:

  • Buyout, $412 billion
  • Real Estate, $151 billion
  • Other, $120 billion
  • Venture, $118 billion
  • Distressed Private Equity, $71 billion
  • Infrastructure, $68 billion
  • Mezzanine, $44 billion