• $189bn of private equity invested globally in 2008, down 40 per cent on the previous year. Private equity investments hit 12-year low in the first half of 2009 at $24bn.
• Funds raised worldwide fell 8 per cent in 2008 and 60 per cent in the first half of 2009.
• Funds raised for secondary market investments reached record levels in the first half of 2009.
• Investments and funds raised in the UK fell 38 per cent and 21 per cent respectively in 2008.
Private equity investments fell 40 per cent in 2008 to $189bn, with buyout activity dropping as private equity firms struggled to obtain debt finance from banks to complete deals, according to new research today from International Financial Services London (IFSL), the independent organisation promoting UK financial services worldwide.
IFSL’s report Private Equity 2009 also states that private equity investments hit a 12 year low in the first half of 2009, dropping to $24bn, 80 per cent down on the same period in 2008. Private-equity backed deals generated only seven per cent of global merger & acquisition volume in 2008, the lowest level since 2001 and down from the record high of 21 per cent in 2006. This figure fell even further to 3.5 per cent in the first half of 2009.
Despite the financial crisis, however, fund-raising levels were down only eight per cent in 2008 to $450bn, a figure influenced heavily by the relatively strong start to the year. The slowdown in fund-raising accelerated in 2009, with under $100bn being raised between January and June, equivalent to a two-thirds drop on the same period in 2008. The secondary market for private equity, where existing stakes in private equity holdings are bought and sold, has seen a record $15.6bn raised in the first half of 2009, already setting a new annual record with six months left in the year.
Meanwhile, global private equity funds under management totalled $2.5 trillion at the end of 2008. The 15 per cent increase during the year was due to strong fund raising activity and an increase in unrealised portfolio investments as firms were reluctant to exit their stakes in market conditions of falling valuations.
Worldwide investments of UK private equity firms mirrored falls on global markets, declining by 38 per cent in 2008 to £19.5bn, while the aggregate value of funds raised fell by a fifth to £23.1bn. The UK private equity market, which remains the most developed outside the US, managed 17 per cent of global investments and 14 per cent of funds raised in 2008. London has successfully held its position as the largest European private equity centre, second only to New York globally.
Marko Maslakovic, Senior Economist at IFSL, said: “The slowdown in private equity investments and funds raised in the first half of 2009 is likely to persist for the rest of the year. Although banks will remain the largest lenders to private equity firms, other participants may have the opportunity to enter this market as some $500bn in loans extended on existing deals will need to be refinanced in the next few years. Despite the challenges presented by the tough market conditions, however, London has successfully maintained its position as Europe’s leading centre for private equity investment and fund management. This reflects the City’s continued attractiveness as a home to a broad range of funds, and offering of access to a deep pool of private equity expertise.”
Click here to view PDF of the Private Equity 2009 report
• Funds raised worldwide fell 8 per cent in 2008 and 60 per cent in the first half of 2009.
• Funds raised for secondary market investments reached record levels in the first half of 2009.
• Investments and funds raised in the UK fell 38 per cent and 21 per cent respectively in 2008.
Private equity investments fell 40 per cent in 2008 to $189bn, with buyout activity dropping as private equity firms struggled to obtain debt finance from banks to complete deals, according to new research today from International Financial Services London (IFSL), the independent organisation promoting UK financial services worldwide.
IFSL’s report Private Equity 2009 also states that private equity investments hit a 12 year low in the first half of 2009, dropping to $24bn, 80 per cent down on the same period in 2008. Private-equity backed deals generated only seven per cent of global merger & acquisition volume in 2008, the lowest level since 2001 and down from the record high of 21 per cent in 2006. This figure fell even further to 3.5 per cent in the first half of 2009.
Despite the financial crisis, however, fund-raising levels were down only eight per cent in 2008 to $450bn, a figure influenced heavily by the relatively strong start to the year. The slowdown in fund-raising accelerated in 2009, with under $100bn being raised between January and June, equivalent to a two-thirds drop on the same period in 2008. The secondary market for private equity, where existing stakes in private equity holdings are bought and sold, has seen a record $15.6bn raised in the first half of 2009, already setting a new annual record with six months left in the year.
Meanwhile, global private equity funds under management totalled $2.5 trillion at the end of 2008. The 15 per cent increase during the year was due to strong fund raising activity and an increase in unrealised portfolio investments as firms were reluctant to exit their stakes in market conditions of falling valuations.
Worldwide investments of UK private equity firms mirrored falls on global markets, declining by 38 per cent in 2008 to £19.5bn, while the aggregate value of funds raised fell by a fifth to £23.1bn. The UK private equity market, which remains the most developed outside the US, managed 17 per cent of global investments and 14 per cent of funds raised in 2008. London has successfully held its position as the largest European private equity centre, second only to New York globally.
Marko Maslakovic, Senior Economist at IFSL, said: “The slowdown in private equity investments and funds raised in the first half of 2009 is likely to persist for the rest of the year. Although banks will remain the largest lenders to private equity firms, other participants may have the opportunity to enter this market as some $500bn in loans extended on existing deals will need to be refinanced in the next few years. Despite the challenges presented by the tough market conditions, however, London has successfully maintained its position as Europe’s leading centre for private equity investment and fund management. This reflects the City’s continued attractiveness as a home to a broad range of funds, and offering of access to a deep pool of private equity expertise.”
Click here to view PDF of the Private Equity 2009 report
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