PE investments to look up in 2H'09

Private equity investments are likely to look up again in the second-half of this year and play a pivotal role in global economic recovery.

Private equity investments are likely to look up again in the second-half of this year and play a pivotal role in global economic recovery, as fund houses are sitting on about one trillion dollar of reserves.

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According to a report by global research firm Preqin, the private equity investment scene is expected to catch up again from the second-half of 2009.

"There is little doubt that the first-half of 2009 will be a dreadful time for fund raising. However, things will start to flow again in the second half as managers come back to market... To partake in the great opportunities ahead," Preqin said in its report titled Private Equity in 2009.

The report added that PE investments made during recessions have delivered the best returns earlier and 2009-2010 would also follow this pattern.

"With approximately $one trillion of dry powder (term used to denote capital available for deals) available, private equity is poised to play a major role in the coming economic recovery," the report added.

In 2008, the PE funds could raise over $553 billion through 768 deals, with over $200 billion being raised by over 300 funds in the second-half of 2008.

With the fund raising activity in the first-half of 2008 remaining bullish, 2008 was the second-highest fund-raising year for private equity to date, with only 2007 seeing more capital raised by the industry.

While PE funds could raise significant amounts in the first half of 2008, there was a slowdown in fund raising activities in the third and fourth quarters.