PE coffers still mighty low

Private equity funds raised $50.4 billion during the first quarter, which was 5% more than was raised during the previous quarter, but still well below recent peak levels. According to a report released on Thursday by Preqin Ltd., the global private equity industry is experiencing a slowed fundraising pace, and it is taking longer than many expected for the improving economic conditions to translate into increased fundraising. The most recent quarterly data compares to $78 billion raised during the first three months of 2009, and $159 billion during the fourth quarter of 2008. The last time the private equity industry saw fundraising at current levels was the last six months of 2004, when $48 billion was raised in the third quarter and $50 billion was raised in the fourth quarter. As part of the report, Preqin stated that it anticipates a more substantial recovery in fundraising for the next three months. During the second quarter of 2009, PE Firms raised $88 billion. Further evidence of the challenging nature of the fundraising market is illustrated by the time it is taking for fund managers to close their investment vehicles. For funds closed in 2010, the average time was 19.1 months, which is more than double the time it took in 2004. Despite what the latest data shows, a Preqin investor sentiment survey conducted in December found that the mood is turning more positive. More than half of those surveyed in December said they planned to commit more capital to private equity in 2010 than they committed in 2009. Only 8% of those surveyed said they planned to reduce their commitment in 2010.