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As April closed, private equity firms were hard at work padding their already robust fundraising numbers, adding more than $6.4 billion to their capital under management. The final leg gave the industry roughly $30 billion in new fire power in April alone, according to data from The Deal Pipeline and the firms' announcements. While secondary funds contributed the lion's share earlier in the month -- powered by nearly $11 billion for funds closed by Goldman, Sachs & Co. (NYSE:GS) and HarbourVest Partners LLC -- it was funds-of-funds that did the heavy lifting in the second half of April.
While the overall April numbers are encouraging for future leveraged buyout activity, the influx of money into funds-of-funds will also serve as a tributary for the formation of new LBO funds in 2009 and beyond. With the traditional limited partner base of endowments and pension funds increasingly squeezed by losses in equity and debt markets, buyout shops marketing or considering new limited partnerships will be heartened to see they may be able to make up some of the difference by turning to funds-of-funds. Siguler Guff Co. LLC, Morgan Stanley Investment Management and Abbott Capital Management closed the largest funds-of-funds, raising vehicles of $2.4 billion, $1.14 billion, and $1.0 billion, respectively. Morgan Stanley Private Markets Fund
IV closed 15% higher than its 2006 predecessor fund and will bankroll LBO,
venture capital and special situations managers primarily in the U.S., Western
Europe and emerging private equity markets. Likewise the $1 billion Abbott Capital
Private Equity Fund VI will be contributing to buyout, special situations, venture
capital and growth equity funds in the U.S. and other developed markets. Abbott
now has around $6.6 billion invested in 200 funds, according
to AltAssets. Meanwhile fund-of-funds investment manager Siguler Guff Co. LLC wrapped up the largest vehicle for what may be a tremendous sector for private equity fundraising in 2009: investment in distressed securities. The fund, which also targets co-investment opportunities, is already about 50% committed, according to a source familiar with it. But looking further out, funds like Siguler Guff's may be looking at big opportunity in the Treasury Department's Public-Private Investment Program, or PPIP, as the federal government will be providing investors with leverage to purchase distressed securities from the banking sector. When Treasury released the application to be a fund manager in the PPIP last week, over 1,000 funds reportedly applied. Additionally billionaires such Wilbur Ross and Richard LeFrak, as well as other managers like Florida real estate developer Stanley Tate, are starting out raising funds dedicated to participating in the PPIP. Last week Ross and LeFrak announced a consortium that has $1 billion to invest in Treasury's mortgage market recovery plan. The two will utilize Invesco Ltd. and its WL Ross & Co. affiliate, along with the LeFrak Organization to buy assets through the PPIP. The joint venture has also created strategic partnerships with women-owned Muriel Siebert and Co., as well as with minority-owned firms Williams Capital Group and the Jackson Securities affiliate of Atlanta Life Financial Group. Tate's AmeriBid Opportunity Fund I LLC began raising $250 million, and reportedly has already attracted four times that amount from about eight investors, Tate said in an interview with Bloomberg. Furthermore Thomas Capasse of Waterfall Asset Management LLC told the news service that there are already 10 to 15 standalone funds dedicated to buying distressed mortgages that have $250 million under management. - George White See
Dealscape post on April PE fundraising
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