PE Investments Rocket 184% in Third Quarter to $40.1 Billion

Private equity investments in third quarter grew by 184% compared to last year, according to the Private Equity Growth Capital Council, previously called Private Equity Council.

Globally, PE shops invested $40.1 billion in transactions—which includes buyouts, minority stakes, and private placements —during third quarter. This compares to $14.1 billion for the same time period in 2009, says Jason Thomas, the Council’s VP of research.

Third quarter’s totals are also up 10% from second quarter when PE shops invested $36.4 billion, the Council says.  The PE Growth Capital Council, a Washington D.C. trade group, uses its own data, as well as information from Thomson Reuters, Pitchbook and Preqin, to calculate its findings. See findings here.

Year-to-date global PE investments totaled $94 billion, up 218% from the first three quarters of 2009 when PE firms invested $29.5 billion, Thomas says. Last year, he says, “was obviously a rough year for all sorts of investments.”

This year’s totals are up nearly 18% from the previous record set in 2007 when the first three quarters recorded $80 billion of equity invested, Thomas said.

However, global PE fundraising remains sluggish. Buyout shops raised $24.96 billion in third quarter, off 4.4% from second quarter‘s $26.11 billion and roughly the same as the $24.7 billion in third quarter 2009, Thomas says.

Year-to-date, fundraising totaled $78.6 billion in 2010, a 23% decline from the $102 billion raised during the first three quarters of 2009. This year’s totals are still down 76% from 2008’s record year when PE firms raised $324 billion through the first three quarters.

The hard fundraising is tied to $465 billion in capital reserves that buyout shops are sitting on, Thomas says. “It would be surprising to have fundraising at 2008 levels with so much dry powder,” he says.