U.S. AND EUROPE RAISE FEWER PRIVATE EQUITY FUNDS IN 2012

Dow Jones LP Source: U.S. Private Equity Funds Raise Most Capital since 2008 Despite Drop in Number of Funds; Median Fund Size Increases for both Regions

Limited partners showed less support for U.S. and Europe private equity funds in the latter half of 2012, leading to an overall yearly decline in funds raised for both regions, according to Dow Jones LP Source.

In 2012, private equity firms raised 426 U.S. funds, a 6% decrease from the 453 funds raised in 2011. Despite this drop, U.S. private equity funds had a positive year overall, netting $160.4 billion, the most raised since 2008 and a 20% increase from the $133.2 billion raised last year.

“Some of the largest firms re-entered the fundraising fray in 2012, which drove up overall volume in the U.S. during the year,” said Laura Kreutzer, editor of Dow Jones Private Equity Analyst. “But the numbers are deceiving – many firms struggled to reach their targets and will probably continue to do so as more firms market new funds in 2013.”

European private equity funds performed worse in 2012, raising $58.1 billion across 157 funds, a 14% drop from 2011 when 182 funds garnered $59.2 billion.

Median fund size increases for both U.S. and Europe

Both the U.S. and Europe saw an increase in the median fund size for 2012. While the median U.S. private equity fund increased 24% to $310 million this year, the median European private equity fund grew 45% to $300 million.

The median buyout fund size in the U.S. reached $500 million in 2012, the highest on record and an 8% increase from the $464 million median reached in 2011.

Fewer U.S. buyout/corporate finance and mezzanine funds raise more capital

In the U.S., the buyout/corporate finance and mezzanine segments both raised more capital through fewer funds in 2012, accounting for the overall increase in funds raised by general partners.

Key developments within the buyout/corporate finance category in 2012 include:

* 192 funds raised $114.3 billion, a 25% growth in capital from the $91.4 billion netted by 196 funds in 2011;
* An 11% increase in the number of buyout and acquisition funds, with 88 funds raising $53.4 billion;
* Advent International Corp. raised $10.8 billion in 2012 for the largest buyout fund (Advent International GPE VII LP) of the year; and
* A 17% decrease in investment for Europe, amounting to 69 funds raising just $39 billion.

Mezzanine funds also experienced notable changes in 2012, with 26 funds in the U.S. raising $10.8 billion, a 108% increase in capital from the 32 funds that garnered $5.2 billion in 2011. The median size of U.S. mezzanine funds increased 75% from $222.5 million in 2011 to $388.8 million in 2012.

Venture Fund-Raising Holds Steady in U.S.

U.S. venture capital fund-raising remained level in 2012, ending with 154 funds garnering $20.3 billion, a 1% decrease in funds and a 1% increase in capital raised in 2011.

Other venture capital fund-raising highlights for 2012 include:

* New Enterprise Associates XIV LP, the largest U.S. venture capital fund of the year, raised $2.6 billion, accounting for 13% of the total amount raised in 2012;
* A 12% increase in the median U.S. fund size to $150 million from $134.5 million one year ago;
* 60 European venture capital funds raised $4 billion, representing a 2% decrease and 8% decrease, respectively, from 2011;
* Index Ventures VI LP, the largest European venture capital fund of the year, netted $435 million;
* An 11% increase in the median European fund size from $71.2 million in 2011 to $79 million in 2012.

LP Secondaries and Funds of Funds Spike in Europe

Although much of Europe’s private equity fundraising fell in 2012, capital raised through LP secondaries and funds of funds surged 155% and 593%, respectively. In Europe, 10 LP secondary funds raised $11.1 billion in 2012 compared to the $4.4 billion raised across three funds last year. Likewise, 12 funds of funds netted $3.3 billion this year, a significant increase from the $475 million raised by 10 funds in 2011. AXA Private Equity’s $900 million fund (AXA Private Equity Fund of Funds) and Danske Private Equity’s $846 million fund (Danske Private Equity Partners V K/S) accounted for a bulk of this increase.

Investment in U.S. secondary funds rose by 55% in 2012 to $10.5 billion, in large part from LP secondaries, while 32 fund of funds garnered $4.6 billion, a 53% decline in capital from 2011.

Dow Jones LP Source classifies multiple fund closings (first, interim, final) separately to provide an accurate view of the fundraising environment.

For more information about Dow Jones LP Source or Private Equity Analyst, visit http://www.dowjones.com/privatemarkets?from=pr-privatemarkets