Private-equity fundraising plummets

Private-equity firms continue to struggle to raise funds as the recession wears on, according to a report today in the Dow Jones Private Equity Analyst newsletter.

During the first six months of 2009, 173 private-equity funds raised $54.9 billion, down from the $152.7 billion raised by 261 funds during the first half of 2008, representing a 64% decline, the report said.

But the difficult economy has led many pension funds, endowments and foundations to look to sell their stakes in private-equity funds. That has fueled an interest in secondary funds, the report found.

Secondary-funds pool capital from investors to purchase existing stakes in private-equity funds.

Eighteen secondary funds have already raised $13.9 billion this year, setting a new annual record early in the year, according to Dow Jones.

The venture capital industry is also suffering, the report said.

In the first six months, 51 venture funds raised $5.1 billion. That represents a 63% decline from the same period last year, in which 115 funds raised $13.6 billion,

The total raised represents the worst first half for venture capital investment since 2003, when 34 funds raised $2.2 billion.

Dow Jones Private Equity Analyst is published by Dow Jones Financial Information Services, a division of Dow Jones & Co. Inc. of New York.