Private Equity Fundraising Levels Up in Q3

On the back of a single fund – Permira III – third quarter fundraising in Europe was more than double the amount raised in the previous period.   Across the pond, North American fundraising edged up on the second quarter but was still only just over a third the amount raised during the same period last year, according to AltAssets data.

“The total for 2003 as whole in Europe will do well to match two thirds of last year’s figure but the prospects for North America are truly dismal. It looks extremely unlikely that North American funds will reach even half of last year’s level,” said Chris Davison, head of research at AltAssets.

Overall, 10 funds in Europe held final closes in the third quarter for a combined total of €10.3 billion, compared with 12 attracting €4.4 billion in the second quarter (See   Europe Private Equity Fundraising Up; US Down ) .   AltAssets attributes the drop to the number of funds, but an increase in the value of the deal, the enormous impact Permira III had on the third quarter landscape.   The final close of Permira III. with €5.1 billion of commitments made up half the total for the quarter and almost a third of the total for the year-to-date.

Thus far in 2003, there have been 32 final closes in Europe worth a combined total of €16.9 billion, compared with 47 funds worth €22.5 billion in the same period of 2002.   Prognosticating for the remainder of the year, AltAssets sees European funds doing well to secure €20 billion of final closes for the year as a whole. That would mean a fall of nearly a third from last year’s total of €29.3 billion and would be the lowest level since 1996.

Aside from final closing, interim closings had a combined value of €1.4 billion, down from €2.5 billion in interim deals at the end of the second quarter.  

Buyout firms have carried the torch for the European markets year to date, accounting for 77% of the value of funds raised, compared with 71% in the same period last year.   The remaining market components were spread between an 8% allocation in venture firms and the remaining 15% accounted for by funds of funds, secondaries funds, and general, mezzanine or other funds.

US Levels

By comparison, the United States had a total of 10 private equity final closes worth a combined $7.1 billion in the third quarter, compared with 18 funds closing on a combined $4.9 billion in the second quarter of this year.   The value of venture funds holding a final close thus far in 2003 has fallen more than 70% to $2.6 billion from $8.8 billion in the same period last year. The number holding a final close has dropped to 16 from 41.   Further, there were just $655 million of interim closes in the third quarter, compared with more than $2.5 billion in the second quarter.

Offering a projection into the rest of the year, AltAssets says the United States would top out at $30 billion for 2003 as a whole, less than half of the $65.7 billion raised in 2002.

As opposed to European markets, buyout firms were down in the United States’ market.   The value of buyout funds holding a final close has fallen 67% to $9.2 billion from $28 billion in the same period of 2002. The number, however, has held relatively steady at 17 compared with 20 last year.

AltAssets attributes the decline to the absence this year of mega funds. Last year three firms, Apollo, Warburg Pincus and Blackstone, closed funds worth a combined $15.5 billion in the first three quarters of the year. Only three funds in the US have raised more than $2 billion this year.

The data is sourced from the AltAssets Fund Calendar, a database of global private equity fundraising activity. The calendar currently tracks 444 funds globally, of which some 177 are based in Europe.  More information can be found at    www.AltAssets.net.