ta associates
norwest venture partners
Hellman & Friedman

U.S. Private Equity Firms Raised Less Than $100B In Funds Last Year, Down 68%

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According to just released Dow Jones LP Source figures, U.S. private equity fund-raising closed out its worst year for fundraising since 2003, with 331 funds raising a mere $95.8 billion in 2009. That’s down 68% from the $299.9 billion raised by 508 funds in 2008.

Zooming in on the past quarter (Q4 2009), Dow Jones LP Source figures show PE firms raised $20.5 billion in 75 funds, down 80% from the $102.7 billion raised by 188 funds in the fourth quarter of 2008.

Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst, isn’t overly optimistic for 2010 either, and says we’ll not be seeing a return to levels seen before the economic downturn even though limited partners are likely to become more active this year.

Leveraged buyout and corporate finance funds raised just $53.7 billion across 133 funds last year, a 73% drop from the $195.5 billion raised by 204 funds in 2008. Despite that drop, it remains the biggest slice of the capital pie. Mega funds (funds of $6 billion or more) had most difficulty raising capital in 2009. Six mega funds raised $14 billion, but more than half of the year’s total for mega funds was raised by a single firm, Hellman & Friedman, which raised $8.8 billion for its seventh fund last year.

One silver lining in the report: the secondary market was the only subsector of private equity to turn in a strong performance, collecting $17.5 billion in 2009, up 83% from 2008 and a new record.

It wasn’t a stellar year for venture capital either, as you may have heard. Still, Dow Jones LP Source says, VC firms did not have as difficult a year as buyout firms. Venture fund-raising fell 55% to $13 billion across 120 funds from the $28.7 billion collected by 204 funds in 2008. In the fourth quarter, 21 funds raised $4.4 billion, a 56% drop from the same period last year. We’ve spotted an increase in VC funding deals in Q4 2009 based on CrunchBase data as well.

A few of the big winners in 2009 were New Enterprise Associates, which raised $1.2 billion, taking the total amount raised to date for the firm’s 13th fund to $2.5 billion, and Norwest Venture Partners which closed its 11th fund in the fourth quarter after raising $1.2 billion. Outside of Hellman & Friedman’s mega fund and Goldman Sachs Private Equity Group’s secondary fund ($5.5 billion), the fund that closed on the most capital last year was TA Associates’ eleventh fund, collecting $3.5 billion for its $4 billion fund in 2009.

(Image via Flickr / Oxfam International)

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