Posted on Wednesday, January 19, 2011
Private equity real estate funding totaled $35.8 billion globally in 2010, which is the lowest annual total since 2003, when funds raised just over $14 billion, a study found.
The numbers are 28 percent lower than the $49.8 billion raised in 2009.
The study, conducted by Preqin, an information company for alternative assets based in New York, examined private equity funds from around the world.
It found that funds with a primary focus on North America raised the most capital last year, about $22.5 billion. Nineteen funds focused on Europe raised $3.4
billion, and 45 funds focused on Asia and the rest of the world raised $10 billion.
Only two of the top 10 largest funds that closed in 2010 were focused on the United States, but 88 funds in total closed last year, spending an average of 17.6 months on the market. This was a 0.2 percent decrease from the amount of time it took funds to reach final close in 2009.
Andrew Moylan, manager of real estate data for the company said the results from the challenges of 2010 may lead to some firms merging to keep from going under.
“There are some signs that the fundraising market may be thawing, with a number of funds closing above their target as some fund managers have been successful during 2010. Many other firms however have continued to struggle, delaying closes or raising far less capital than they originally targeted,” he said.
He continued, “The increase in the aggregate target of funds in market does suggest renewed confidence amongst fund managers, but also serves to make the fundraising market even more crowded and competitive. It is clear that there will not be enough new capital from institutional investors to satisfy the fundraising ambitions of all the vehicles currently on the road, and as a result, it is likely that we will see some consolidation in the private equity real estate industry in 2011.”
By: Joy Leopold, DS News