Capital Markets

Who Says Private Equity Is Dead?

The firms' fund-raising efforts are alive and kicking.
Stephen TaubMarch 21, 2008

In recent weeks, several private-equity sponsors have raised money for new funds. The efforts could reflect renewed activity in an industry that has been in a slump as PE deals collapse in response to the credit crisis.

The biggest recent fund-raising appears to be coming from Welsh, Carson, Anderson & Stowe. Its co-founder Russell Carson said last week at The Deal’s Healthcare Dealmaking Symposium that it is in the middle of raising $4 billion for a new investment fund. According to the paper, the fund will be larger than the firm’s last two funds — Welsh, Carson, Anderson & Stowe X LP, a $3.4 billion equity fund, and WCAS Capital Partners IV LP, a $1.3 billion dedicated subordinated debt fund.

Meanwhile, Kohlberg & Co. recently announced the closing of its sixth private-equity fund, Kohlberg Investors VI LP, with $1.5 billion in commitments from its limited partners. The fund exceeded its initial target of $1 billion.

Kohlberg makes control investments in middle-market companies through divisional buyouts, public company buyouts, and acquisitions of privately held companies. It has completed 47 platform investments and more than 50 add-on acquisitions, with aggregate transaction value in excess of $7 billion.

Adding to the private-equity activity is Beecken Petty O’Keefe & Co., which is close to reaching its $650 million target for its third fund-raising effort, according to LBO Wire. The firm specializes in health-care deals.

The global credit crisis has not been kind to private-equity deals, which rely on a healthy amount of borrowed funds. A number of sponsors have either backed out of previous commitments, tried to do so, or have asked the seller to agree to a lower price before closing a deal.

“Private equity will suffer considerably over the course of the next two years as the current difficult markets take their toll,” private-equity financier Guy Hands told Reuters.