Data published by research firm Preqin shows that during the second quarter private equity fundraising focused on real estate investments rebounded from a lackluster performance in the first quarter. For the three month period from April to June, a total of 33 private equity real estate funds held final closing and raised $17.3 billion, almost thrice the amount raised in the first quarter. Private equity real estate funds raised just $6 billion in the first quarter, a 10-year low for a quarter.
PE Real Estate Funds Witness Strong Investor Appetite
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The Preqin data shows that there was increased momentum in the private equity real estate space in the second quarter. The report found that about 51 funds raised the targeted funds at the time of interim close itself. There was also improvement in the amount of time spent on the market by funds. Funds that closed in the first half of the year spent an average of 18.7 months in the fundraising market, an improvement over 19.2 months in average in 2012.
The number of private equity real estate funds in the market increased to 446 in the second quarter from 434 in the first quarter, but the targeted aggregate commitments climbed an impressive $12 billion to $168 billion in the June quarter from $156 billion in the March quarter. Private equity real estate funds focused on investing in North America raised the most capital during the quarter with 26 such funds receiving aggregate commitments of $15.3 billion followed by three Europe focused funds raising $8 billion.
Colorado Ranked Third In PE Investment In 2012
A separate annual report released by the Private Equity Growth Capital Council shows that Colorado ranked third in total PE investments in the US in 2012, behind the two most populous states Texas and California. PE firms invested approx. $27 billion in 67 Colorado-based companies last year. Colorado was ranked ninth in terms of the number of private equity investments.
In all, private equity investments in the US totaled $347.3 billion among 2,083 companies in 2012, a significant improvement over 2011 when only about $144 billion was invested in 1,702 US companies. Texas again attracted the most capital with approx. $47 billion in private equity investments well ahead of second placed California, which took in $35 billion.
Private equity investments were somewhat even across industries last year. While consumer sector received 19 percent of all PE investments, information technology and financial services each accounted for 18 percent of investments followed by energy at 17 percent and business services at 16 percent. Only about 8 percent of private equity investments went into healthcare sector in 2012.
Outlook Remains Cloudy Despite Some Recent Positives
While the recent rise in buyout deals as well as the strong investor appetite for PE real estate funds are near term positives for the job market, the short supply of new deals suggest that the fledgling recovery in private equity could be at risk of fizzling out in the absence of pick up in new deal activities.
