According to Dow Jones LP Source, both U.S. and Europe based private equity funds saw strong support from Limited Partners in what was the best half for private equity fundraising since 2008. American private equity managers managed to raise $86 billion in new money in the first half of 2012, while their European counterparts gained $37 billion in the same period. Increased distributions from private equity managers in general have encouraged more investment in the asset class as investors look for steady returns amidst market uncertainty.
Industry Focus is the Focus
Investors are not just allocating their money randomly to any fund manager, however. Industry focused funds are the primary target for American investors. In particular, buyout and corporate finance funds were the most active during the first half of the year, receiving $59 billion amongst 108 different funds. Even within these specific fund classes, investors are looking for focus, allocating money to funds focused on specific industries.
In addition to buyout and corporate finance funds, venture capital is also seeing somewhat of a renaissance in the first half of the year. In this segment, 82 different funds managed to obtain $13 billion in new financing. This is up a staggering 31 percent from the same period a year ago, showing a renewed interest in investing in promising new ventures.
The Challenges in Europe
Despite the good news, European funds seem to be facing some stronger headwinds as the year moves on. In the second quarter, European funds raised only $14.2 billion, in comparison to the much stronger $23.1 billion in the first half.
The allocation between asset classes was also much different in Europe in comparison to the United States, where diversified corporate finance private equity funds outperformed buyout and acquisition funds by a wide margin. Buyout funds saw a 41% decline in capital while diversified funds managed to raise more than ten times the amount seen in the same period last year.
Still Tough Times
While this growth may seem encouraging to those that are interested in opportunities in the private equity space, firms are still hesitant to add resources in such uncertain economic times. Funds in the United States are growing at a faster pace than their European peers, which is indicative where new opportunities may be found when they become available. Firms are most often interested in individuals that have specific industry or investment class knowledge and experience that can add value to their investment analysis.