How’s that, you ask? Didn’t the credit markets collapse at mid-year and derail the private equity industry? Welcome to the new era of vulture private equity.
According to Dow Jones Private Equity Analyst, a unit of the company now owned by News Corporation that tracks the private equity business, US private equity firms raised a record 302 billion bucks in 2007, up 19% over 2006. To be sure, a lot of that was raised in the first half of the year, before the credit markets tanked and private equity deals began going south. But there was a lot of action in funds focused on buying distressed properties, with nearly 45 billion raised by 22 such funds. That was almost three times the previous record for annual investment in such funds.
"With creditors tightening their belts, the days of easy financing are over and private equity investors are positioning themselves to capitalize when overextended companies fall into trouble in the months and years ahead. Oftentimes, the best opportunity for investors to see sizeable returns is when overall market conditions are less favorable." said Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst.
RBR observation: Anyone want to bet on how long it will be before we see one of those vulture funds making a bid for a battered broadcasting company? There are plenty of unhappy investors, particularly in radio, who would welcome an opportunity to cut their losses and run. Interep and Regent Communications have already had encounters with such funds, but both remain independent and publicly traded.