Report: PE Fundraising Slows To 2005 Levels

NEW YORK (Reuters) – Private equity fund-raising is at its slowest for more than three years as the turmoil affecting the global financial markets continues, according to data released on Monday.

A total of 117 funds raised $82.3 billion from investors in the third quarter of 2008, figures from London-based research firm Private Equity Intelligence showed. That was the lowest dollar amount raised since the first quarter of 2005.

At the height of the private equity boom, in the second quarter of 2007, a total of 282 funds raised $204.7 billion.

The latest figures are not final and could increase as additional information of funds closing during the period becomes available. Funds are included in the quarterly data when they finish raising money from investors — known as closing.

“Private equity fund-raising is set to enter its most challenging era of all time,” said Preqin spokesman Tim Friedman in a statement.

“With so many funds out there seeking investors, the capital available to them will be spread extremely thinly, and only those that are extremely focused will be successful in raising the capital that they targeted at launch,” he added.

Private equity firms raise money from investors such as major pension funds and invest it in buying companies with the aim of selling them at a sharp profit.

But the credit crunch closed off the supply of leverage for deals of any significant size, which hit the ability of private equity firms to raise fresh capital.

(Reporting by Megan Davies, editing by Richard Chang)