The third quarter of 2011 was rough on everyone. Volatile equity markets, thanks to the credit crisis in Europe and the downgrading of US sovereign debt in the middle of August, have put the brakes on IPOs, private equity, venture capital and just about everything else. Let’s skip the commentary and go right to the numbers:
1. Buyout and corporate finance lead the way in the US: these two sectors were good for $66.6 bn in the first three quarters of 2011, with 139 funds adding to the pile. This is a 52 per cent increase for buyout and corporate finance funds year over year.
2. Industry focus is crucial: industry-focused funds were good for $19 bn in fresh capital in the first nine months of 2011 in the US, a 69 per cent year-over-year increase. In Europe, buyout and acquisitions were in the top spot, raising $22.6 bn. That’s a 4X increase from last year’s year-to-date $5.3 bn.
3. Split decision on secondary funds: in the US, the secondary market only picked up $3.6 bn across 13 funds so far this year, a decline of 59 per cent relative to the same period in 2010. In Europe, on the other hand, six of them raised $4.8 bn, almost 5X better than $4.8 bn for the first three months of 2010.
4. Split decision on funds of funds (mirror image): commitments to funds of funds shot up in the US: increasing 74 per cent to $7.4 bn for the first three quarters of this year. In all last year, funds of funds attracted only $6.2 bn. In Europe, however, five funds of funds raised a mere $269 mn, a sharp decline from $3.3 bn for the same period in 2010.
5. The Achilles heel: the venture capital market continues to show some weakness. 30-two funds have raised only $2.4 bn so far in the US, a 24 per cent decline from last year. So far this year, venture capital funding is up 9 per cent in the US, but more than half of the cash raised ($10.6 bn) came in Q1. In Europe, according to Dow Jones LP Source, ‘venture capital fundraising is on pace to set another record low’. Ouch: 25 funds have pulled in only $1.8 bn so far this yewar. That’s a decline of 31 per cent. Q3 was good for only $424 mn.
Source: Dow Jones LP Source (via email)