NEW YORK, Oct. 8, 2012 (GLOBE NEWSWIRE) -- Private equity funds in the U.S. raised nearly as much capital in the first three quarters of 2012 as during the entire 2011 calendar year, according to Dow Jones LP Source. In addition, 2012 commitments from limited partners in Europe are on track to surpass 2011 fundraising.
During the first three quarters of 2012, U.S. private equity firms raised $130.1 billion for 326 funds, a 36% increase in capital raised despite 19 fewer fund closings as compared with the first three quarters of 2011, and nearly matching the $131.5 billion total capital raised during 2011. In the third quarter alone, 111 U.S. funds raised $40.6 billion as compared with 121 funds in the second quarter of 2012 that raised $47.3 billion, a decline of 14% in capital raised.
In Europe, fewer funds raised more capital during the first three quarters of 2012 compared with the year-ago period. Private equity firms raised $47.8 billion for 118 funds in the first three quarters, a 20% increase in capital raised.
However, momentum since the second quarter has slowed. Thirty-seven European funds raised $8.9 billion during the third quarter, a 42% decrease in the amount raised compared to last quarter.
"U.S. private equity firms have worked hard to return capital to their investors over the past two years and that's given investors both additional capacity and confidence to fund new commitments," said Laura Kreutzer, managing editor of Dow Jones Private Equity Analyst. "Although it's far from easy to raise capital today, more private equity firms have the wind at their backs than did even a year or two ago."
Buyout and corporate finance on the rise in the U.S., fueled by spike in diversified private equity funds
Several categories of private equity funds in the U.S., including buyout and corporate finance funds, and diversified funds, saw spikes in fundraising capital so far this year versus the same three-quarter period last year.
During the first three quarters of this year, U.S. buyout and corporate finance funds raised $96.2 billion for 149 funds, a 43% growth in capital compared with the same period in 2011.
Most notably, capital raised by diversified private equity funds more than tripled. Seventeen diversified funds raised $13 billion in the first three quarters of 2012 compared to the same number of funds raising just $4 billion in the same period last year. In addition, 29 funds focused solely on buyouts and acquisitions raised $17.3 billion in capital during the third quarter, 18% more than the second quarter.
Mezzanine funds raised $7.9 billion for 21 funds during the first three quarters of 2012, a 74% increase in capital from the year-ago time period despite seven fewer funds.
Investment in secondary funds rose by 42% for the first three quarters of this year to $5.4 billion.
Funds-of-funds continue to see a downward trend. During the third quarter, four funds raised $717 million, the lowest seen since the third quarter of 2009, and a 50% decline in capital fundraising from the third quarter last year, in which 13 funds raised $1.4 billion.
The largest fund during the third quarter was Advent International Corp.'s Advent International GPE VII LP, which raised an initial $8.4 billion of a fund targeting $9.3 billion.
The largest closing of the third quarter was Ares Management LLC's Ares Corporate Opportunities Fund IV LP, a buyout fund that closed at $4.7 billion.
European private equity funds' momentum slows from second quarter
Despite a high first quarter of committing $23.5 billion, limited partners in European funds have continued to slow their investment pace over the course of this year.
Thirty-seven European funds raised $8.9 billion in the third quarter of 2012, a 42% drop from the second quarter when 36 funds raised $15.4 billion, and a 30% drop from the third quarter last year when 37 funds raised $12.8 billion.
During the first three quarters of 2012, 54 buyout and corporate finance funds raised $32.1 billion, a slight 3% increase in capital from the year-ago time frame. Within this segment, buyout and acquisition funds saw a 46% decline as 21 funds raised $12.8 billion.
Mezzanine funds did not fare well in the first three quarters as three funds raised $475 million, down from $1 billion raised for the same number of funds during the year-ago time frame.
Investment in secondary funds increased by 79% during the first three quarters of this year to $8.7 billion.
Venture capital fundraising in the U.S. and Europe on track to exceed 2011 totals
U.S. and European venture capital funds continue on track to exceed fundraising totals from 2011, which were $19.7 billion from 153 funds and $4 billion among 55 funds, respectively.
During the first three quarters of 2012, 120 venture capital funds in the U.S. raised $17.5 billion, a 38% increase in capital from the same time period in 2011.
The 39 European venture funds, which raised $3.2 billion, saw a 58% increase in capital from the third quarter of 2011.
U.S. early-stage venture capital funds raised nearly twice as much capital compared to the same period last year. Seventy-one funds raised $4.5 billion during the first three quarters of 2012 versus 63 funds that raised $2.3 billion during the same time period last year.
The largest venture capital fund that closed during the third quarter in the U.S. was Sequoia Capital's Sequoia Capital U.S. Growth Fund V LP, a late-stage venture fund that closed for $950 million. Also during the third quarter, New Enterprise Associate's New Enterprise Associates XIV LP held a final close on their $2.6 billion multi-stage venture fund.
Dow Jones LP Source classifies multiple fund closings (first, interim, final) separately to provide an accurate view of the fund-raising environment.
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