How Much of That $264 Billion Went To First-Time Funds?

Last year, buyout and mezzanine funds officially raised $264.512 billion, according to the most recent Buyouts data. But how much of that went to emerging managers raising a first-time fund?

So I sliced down the 2008 fundraising spreadsheet to show just the first-time funds. It’s a bit of a rough cut, but I’ve determined that, of the $264 billion raised, a mere $51.45 billion of that went to new funds.

It’s relevant for reasons we already understand: first-time funds are probably SOL this year. If commitments to emerging managers only comprised 19% of fundraising in a good year, what will it look like in 2009, which is expected to look horrifying?

For context, at the two conferences I attended in the past week, LP after LP said their fund would not take on any new relationships this year. But even if every LP merely re-upped this year, buyout pros are expecting far more drastic drops in fundraising numbers. Simply subtract new managers from the equation, and you’ve got $200 billion for 2009. Most PE pros and LPs are predicting less than $100 million for the year. Even existing managers in the market are going to have trouble.

But that doesn’t seem to phase the host of new funds in the market, so for their sakes, I’ll include a tiny bit of advice culled from said LP panels:

In a “five questions” round moderated by PEA’s Laura Kreutzer, LPs said they have the least tolerance for general partners who:

-“Confuse being lucky with being smart”
-“Are overconfident.”
-“Tell us they have no problems in their portfolio, which in today’s market means they’re lying.”
-“Blame the market and say, ‘Leverage was so easy we have to say yes!'”


2009 Fundraising Predictions Don’t Look Pretty
Sign of the Times?
A List of First-Timers In The Market
In A World Of Reduced Appetites, Distressed Debt and Secondary Funds Come To The Fore
PE Has $1 Trillion in Dry Powder
Should PE Pros Be More Accountable For Mistakes? LPs say “Yes!”