Preqin data reveals that in the last ten years 197 Massachusetts-based general partners have raised private equity funds totalling $226.7 billion. Buyout funds account for 59% of this figure having raised $132.7 billion, while venture funds have accumulated $42.7 billion, approximately 19% of the total. Moreover, there are currently 32 Massachusetts-based private equity funds on the road, targeting an aggregate total of $12.7 billion.
Venture funds account for 58% of all fund types in The Bay State, almost double the next most prevalent fund type, buyout funds, which make up 30% of private equity fund types in the area. Mezzanine funds and distressed private equity funds comprise the majority of the remaining 12% of private equity funds.
The private equity firms of Massachusetts most commonly invest in the information technology sector above all others, with 55% of general partners in the state targeting this industry. Following this, 50% of all firms look to invest in healthcare, and 46% will consider the telecoms, media and communication sector. Only 24% of private equity firms in the state are sector agnostic, the remainder indicating a preference for specific industries for their investments.
Typically, most Massachusetts private equity firms focus their investments in the US. In 2007, 82% of the capital raised in the state was invested in the US, with the remaining 18% split evenly between Europe and Asia and Rest of World. 2008, however, saw Europe increase its share of investment from Massachusetts-based private equity funds to 40% of capital raised, while Asia and Rest of World only attracted a meagre 1%. The US continued as the most attractive world region for private equity investment sourced in Massachusetts, securing 59% of funds raised during the year. Preqin data obtained for 2009 to date suggests that this dominance is set to continue.
Information for this report was taken from Preqin’s Funds in Market and Fund Manager Profiles products.