January 06, 2007
Largely due to the advent of the "mega" buyout fund, global private equity fundraising smashed previous yearly records by hitting US$401 billion in 2006.
The money raised by 612 new funds, including buyout, venture capital and fund of funds, came in 29% higher than the previous record of US$311-billion raised in 2005, according to Private Equity Intelligence.
Buyout and co-investment funds accounted for US$204 billion of the money raised in 2006 by the private equity industry worldwide. Nearly half of this, or US$96 billion, came from 10 funds valued at US$5 billion or more.
These giant funds were raised in the United States and Europe by firms including KKR, The Carlyle Group, The Blackstone Group, Permira Funds and Apax Partners. In Canada, Toronto-based Onex closed a US$3.45 billion fund, the country's largest in 2006.
Canadian buyout funds tend to be smaller than those in the United States and Europe, but Canada's private equity industry grew dramatically in 2006. In total, the Canadian private equity industry raised roughly C$9 to C$10 billion, triple the 2005 amount.
With more funds now looking to deploy large piles of cash, deal sizes should continue to grow in 2007, says Phil Brown, especially as firms team up on "club deals"--such as last year's US$33 billion buyout of HCA Inc. by a group including KKR, Bain Capital Partners and Merrill Lynch Global Private Equity.