Report: Private Equity Fundraising Has Gloomy Expectations for 2010

After a dismal 2009, the private equity space still looks bleak.

(January 11, 2010) — Private equity fundraising suffered in 2009, battered by the late 2008 financial crisis, and it’s now at a 5-year low.

According to Preqin, a London-based data provider, $246 billion was raised by 482 funds last year, down 61% from 2008 and the lowest since 2004.”We are seeing a trend away from the bigger mega-buyout funds toward more of a focus on smaller mid-market and regionally focused vehicles,” the report said. The average period of time to raise a fund is now more than 18 months, when it previously stood at just a year, Reuters reports.



The biggest fundraisers of 2009, according to the report, were CVC European Equity Partners V (raised $10.7 billion); First Reserve Fund XII (raised $8.8 billion); and Hellman & Friedman VII (raised $8.8 billion). The report added that the likelihood of a return to the fundraising levels seen in 2007 and 2008 are “very slim.”

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The bleakness of the private equity space is illustrated by Blackstone Group LP, the world’s biggest buyout company that raised a $21.7 billion private-equity fund in 2007. For months, its new flagship fund has been at a standstill in the $8 billion to $9 billion range, the Wall Street Journal reported, while Madison Dearborn Partners LLC, which planned to raise a $10 billion fund, has been stuck at about $4 billion.


To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

Illinois Pension Fund Sues Goldman Over Bonus Plans

Suit says bonuses "highlight the complete breakdown" of corporate oversight, saying Goldman’s payouts harm shareholders.

(January 11) — An Illinois pension fund sued Goldman Sachs last week in an attempt to recover billions of dollars in bonuses and other compensation being awarded for 2009, despite the banking giant having accepted government bailout funds.


According to the Central Laborers’ Pension Fund’s suit filed Thursday in New York’s Supreme Court, the fund bought Goldman Sachs shares in January of last year. The suit alleges that by September 25, Goldman had set aside nearly $17 billion for employee compensation and might distribute more than $22 billion for the year.


The suit says that such sums, and Goldman’s practice of continuing to pay out nearly 50% of net revenue as compensation, show “scant regard” for the interests of shareholders, according to Reuters.


Goldman Sachs had required a $10 billion injection from the federal government’s Troubled Asset Relief Program and received $13 billion from insurer AIG after the government bailed it out. In June of last year, the New York-based bank repaid the TARP money.
The suit mirrors a trend of pension funds suing financial institutions, coming shortly after a Virgin Islands pension fund sued Morgan Stanley over CDO sales.

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To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>

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