Filed under: Raising money, Private equity industry
This week’s Barron’s reports that private equity funds are still raising plenty of money. The third quarter of 2007 saw a record level of money flowing into private equity funds, over $66 billion. The fourth quarter wasn’t far behind at $51 billion , suggesting that investor interest in private equity funds remains strong.
The large change is the the size of the funds and the deals they do. Smaller funds set a record for money raised in the fourth quarter, while larger funds saw their take fall by over 20%.
Even though these numbers seem to have surprised some analysts, they make sense. Conventional equity investing looks less attractive as corporate profits are likely to soften. As a result, sophisticated investors look for returns elsewhere, especially in smaller funds doing deals for lesser known companies. In times of market instability, private equity funds tend to see more not less investment.
So while the mega-deals of the last few years fade away for a while, anticipate to see more smaller deals for companies you’ve never heard of.
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