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Is Private Equity Back?

22-Dec-2010, aiCEO

Private equity may have had a rough couple of years, but a recent fundraising success may signal a newfound confidence in this investment strategy.

According to The Wall Street Journal, private equity firm Blackstone Group is in the process of finalizing a $15 billion fund – which would be the largest such buyout pool raised since the financial crisis. It will be the sixth largest fund in the history of private equity, according to research group Preqin, but is smaller than Blackstone’s last fund, a $22 billion pool that closed at the peak of the market in November, 2006.

Still, details of the fund’s creation show that it is not yet a walk in the park for those looking to raise capital for private equity pools. According to The Journal, Blackstone has been raising the money since 2008, with legacy investors committing smaller amounts of capital than they did in years past. Also, more attractive terms were given to those committing $500 million – and honor that once took double that amount. According to The Journal, new investors – notably, “governments and private entities” in Singapore, China, Taiwan, Australia, and Malaysia – were also solicited for capital.

Private equity as a whole suffered in 2008 and beyond, with managers scaling back their allocation to this strategy due to factors such as illiquidity, high fees, and suffering performance.