Despite the soft economy, if not an outright recession, Dow Jones Private Equity Analyst reports that US private equity firms raised 58.5 billion bucks in Q1, up nearly 32% from 44.3 billion a year ago. That means that through Q1 private equity was being raised at a pace ahead of the 2007 full-year record of 309 billion.
Most of the money raised in Q1, though, was by venture capital and mezzanine funds, while money raising by leveraged buyout firms was down 22% to 27.6 billion.
"These figures aren’t really too surprising," said Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst. "The shakeup in the credit markets has slowed the pace of buyout deals. That’s making it harder for large firms like Blackstone Group to justify raising big new funds," she added.
RBR/TVBR observation: No matter how shaky the economy looks, there is always money look for opportunity. Clearly the folks with big bucks to invest think the opportunity right now is not in LBOs. Not surprising given the difficulty in getting financing for LBOs, with several having blown up and the Clear Channel buyout currently on the ropes. So, they’ve turned to venture capital as a place to find good opportunities with early-phase companies, who might have to sell more equity than they might if credit were more widely available, and to mezzanine funds to take advantage of a gap created by the lousy credit markets. So, broadcasters hoping to find a going-private LBO partner may be out of luck. But if you’re looking for a venture capital backer or need mezzanine financing, the landscape may be improving.