Monday, July 09, 2007

No Let Up In Private-Equity Fund Raising

From WSJ Deal Journal:

If investors in private-equity funds are nervous about recent hiccups in the credit markets, they aren’t showing it.
According to this story today from our colleagues at LBO Wire, Carlyle Group, the leveraged-buyout titan, boosted the fund-raising target on its new fund to $17 billion from $15 billion. The new pool, which will be used mainly for buyouts of U.S. companies, probably will be more than double the size of Carlyle’s last U.S. buyout fund, a $7.85 billion pool. As a sign of how good times have gotten for private-equity firms, that fund, raised a mere two years ago, for a time held the distinction of being the biggest ever.
Now, even $17 billion won’t come close to breaking any records. That is because firms including Goldman Sachs Group, Blackstone Group and Kohlberg Kravis Roberts have broken — or are in the process of breaking — the $20 billion barrier. The new round of fund raising comes amid heightened worries by deal makers, investors and buyout executives themselves that the good times of ever larger buyouts and easy credit can’t last much longer. (See more on that in this Wall Street Journal article today about upcoming tests for the credit market.)
Given the bountiful times for fund raising, it is a wonder KKR says that one of the purposes of its recently unveiled IPO plan is to raise money for the firm to invest. (And lends credence to BreakingViews’ suspicion that the share sale may be more about the founders cashing out than KKR is letting on.) It’s also curious that one of the first members of the chorus of caution that has been building this year about the buyout boom is none other than Carlyle co-founder Bill Conway.
Of course all the recent fund raising could be part of a virtuous cycle for the buyout boom. With all that money in their coffers, private-equity firms should be able to keep plowing money into deals even if financing conditions continue to deteriorate.

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