Unfortunately, the first close is also becoming more elusive, according new findings from the private equity data provider Preqin. Further, says Preqin, those incapable of reaching a first close “quickly” can lose momentum and fall short of the total amount of capital that they’ve targeted.
Some of the firm’s specific findings:
* Twelve percent of the funds closed last year were able to secure more than three-quarters of their target capital by the time they reached a first close. That’s down sharply from 2006, when 33% of funds could make the same claim.
* Of the funds closed last year, the 58 percent that held a first close within three months went on to meet or exceed their fundraising target. Only 36 percent of funds that took more than a year to close met or exceeded their fundraising target last year.
*Overall, 61 percent of the private equity funds raised last year held a first close within six months; 12 percent took more than a year.
You can find out more specifics in the full report — including what percentage of buyout funds held a quick first close vs. mezzanine funds, and whether investors were more inclined to quickly fund distressed private equity firms vs. natural resources funds.
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