The first half of 2009 is gone and as far as private equity is concerned, good riddance. New reports from two private equity data companies confirm the bad news most people in the business have known for a while: the volume of deals is lower than its been in years and with endowments and pension funds short on liquidity, the fund-raising environment is brutal. At the risk of grasping at green shoots, it’s not all bad news, however.
According to data company Preqin, private equity firms around the world raised $76 billion in new funds during the second quarter of 2009. A lot of money, of course, but not when you compare it to the humongous $213 billion raised for the same quarter in ‘08, the highest quarterly haul ever.
On the bright side, it is an improvement — however slight — over the paltry $60 billion raised in Q1, the lowest quarterly number in five years. And while Preqin notes many firms have abandoned fundraising completely for the moment or decided to close their funds substantially below target levels, there are some anecdotal glimmers of good news. Some secondary firms, for instance,have had success raising funds lately. A recently closed secondary fund came in 30 percent above its target.
On the deal side of the equation, PitchBook, a newcomer to the PE date business, said the first six months of ‘09 were the slowest half since 2002 with 407 deals closing, most of those during the first quarter. The $3 billion club deal for Florida’s BankUnited was the largest done this year so far.
And speaking of bank’s the FDIC is scheduled to announce tomorrow new guidelines of private equity ownership of banks. As reported widely today, those guidelines are expected to include mandatory investment periods and higher capital requirements for private equity owned banks, among other things.