Private Equity Longs for Go-Go Years

Private equity fund-raising plunged almost 70 percent in 2009 and prospects for a return to the go-go years that preceded it look unlikely, a new analysis shows.

There were 331 funds that raised $95.8 billion last year, the worst for fund-raising since 2003, Dow Jones LP Source reports. The figures show a dramatic turn from the second half of the last decade when buyout firms like the Carlyle Group, Kohlberg Kravis Roberts and the Blackstone Group raised record sums.

The numbers reflect fewer funds as well as lower dollar amounts. In the fourth quarter, 75 funds raised $20.5 billion, compared with 188 funds that raised $102.7 billion in the year-earlier period.

The trends suggest another tough year for private equity, which raises money from wealthy individuals, pension funds and university endowments.

"As the liquidity market loosens up, limited partners will become more active but 2010 will not see a return to levels seen before the economic downturn,” says Jennifer Rossa, a Dow Jones private equity analyst.

Leveraged buyout and corporate finance accounted for more than half of the private equity money raised last year, $53.7 billion by 133 funds. But that dollar figure is a 73 percent drop from 2008.

Venture capital funding declined 55 percent to $13 billion across 120 funds. A survey by Thomson Reuters/National Venture Capital Association yesterday showed a slightly different number: 120 funds raised $15.2 billion, a 47 percent fall from 2008.

While different firms show varied figures, the trends are the same: last year was the worst for private equity since the early part of the last decade.