Europe Private Equity Fundraising Up; US Down

The latest figures in Europe are being attributed to recovery from a very low base in the first quarter rather than a broad and sustained upturn. “The lift in second-quarter European fundraising is largely attributable to a stabilization of the geo-political situation and it remains to be seen whether the pace of recovery will be maintained going forward. Sluggish interim closings would suggest caution rather than celebration but it is likely the first quarter will at least have marked the bottom of the cycle, “said Chris Davison, head of research at AltAssets in the firm’s news release.

Overall, 12 funds in Europe held final closes in the second quarter for a combined total of €4.4 billion, compared with 10 attracting €2.1 billion in the first quarter. Even though this represented an improvement from earlier this year, it was still a far cry from the €12.9 billion raised in the second quarter of 2002.

AltAssets attributes this rather large drop from 2002 to 2003 to significantly lower fundraising totals by “mega funds” – funds worth in excess of €1 billion. The only one closed so far in 2003 was Nordic Capital, which closed with €1.5 billion of commitments in May, compared to four closing at this point in 2002.

Aside from final closing, eight funds held interim closings for a combined value of €2.5 billion at the end of the second quarter, up from eight funds with interim closings in the first quarter for a combined total of only €1.1 billion.

Halfway marks were not nearly as impressive when compared to their 2002 counterparts.   Even though venture funds managed to raise €188 million more than last year, most other categories were down in the first half of 2003 compared with 2002:

• buyout funds raised €6.20 billion less
• general/mezzanine raised €3.69 billion less
• fund-of-funds raised €597 million less.

US Way

While the picture across the pond was hopeful, the United States’ market was less cheerful. “Fundraising conditions in the US are clearly still unforgiving. The second half is expected to see an improvement but it will be from a very low base,” Davison says.

The $4.1 billion raised by US venture capital funds is a marked decline from $6.5 billion in the first quarter and is significantly lower than the $20.9 billion raised at the same point last year.  

Halfway marks were similarly gloomy.   While decreases were seen across all funds types, the decline was more evident in general/mezzanine funds that raised $12.07 billion less in the first half of 2003 compared to the same period in 2002.   Additional first half numbers saw:

• venture funds raised $4.10 billion less
• fund of funds raised $1.94 billion less
• buy-out funds raised $1.57 billion less.

The data is sourced from the AltAssets Fund Calendar, a database of global private equity fundraising activity. The calendar currently tracks 436 funds globally, of which some 210 are based in Europe.   More information can be found at  www.AltAssets.net .