Private Equity Attains New Peaks, But Cloud Cover Obscures the View

"U.S.-based private equity firms raked in an eye-popping $302 billion in 2007 across 415 funds, a new annual record, and for the first time yearly fund-raising has exceeded $300 billion. But the total feels almost like it belongs to a previous era, as the environment these firms face as they begin investing their hundreds of billions in capital looks markedly different than it did when they were raising them.

'Secondary funds should continue to see strength,' said Bruce Ettelson, a partner with law firm Kirkland & Ellis. 'Many banks and other financial institutions have established substantial private equity positions, and in the current environment it may not be the best use of their capital. In addition, many institutional investors that have made fund investments for over 10 years desire to reduce their relationships to a more manageable level.' "

This article appeared in its entirety in the January 2008 edition of Private Equity Analyst.