Private Equity Fundraising Recedes in Third Quarter of 2006 Buyout Funds Continue at Record Pace as Venture Funds Slow



    NEW YORK, Oct. 16 /PRNewswire-FirstCall/ -- After an exceptionally
 robust second quarter, private equity fundraising levels receded in both
 the venture capital and buyout asset classes in the third quarter of 2006,
 according to Thomson Financial and the National Venture Capital Association
 (NVCA). In Q3, fifty-two venture capital funds raised a total of $4.90
 billion and thirty-two buyout funds raised $22.86 billion.
     "At a time when there is a great deal of discussion about whether there
 is too much money entering private equity, this quarter's lower fundraising
 levels, particularly on the venture capital side, are both expected and
 welcome," said Mark Heesen, president of the NVCA. "We are nearing the end
 of the three year fundraising cycle which will raise approximately $75
 billion for venture capital firms. Most venture firms have raised their
 funds and are now actively investing with a 5-7 year horizon in mind."
          Fundraising by Venture and LBO/Mezzanine Funds, 2002- 2006*
 
                        Venture Capital             Buyout & Mezzanine**
 
                        Number     Venture          Number      Buyout &
     Year/Quarter      of Funds   Capital($M)      of Funds   Mezzanine($M)
     2002               171        3821.2           88         24831.1
     2003               145       10683.5           91         28846.8
     2004               203       18601.6          137         51151.1
     2005               207       27012.4          177         96028.0
     2006 YTD           158       25419.0          103         83977.1
 
     3Q'05               62        5611.1           63         22481.7
     4Q'05               74        8368.9           52         32954.7
     1Q'06               65        7098.5           48         25767.1
     2Q'06               62       13420.5           41         35345.3
     3Q'06               52        4900.0           32         22864.7
 
     Source: Thomson Financial & National Venture Capital Association
     *  These figures take into account the subtractive effect of downsized
        funds
     ** This category includes LBO, Mezzanine, Turnaround and Recapitalization-
        focused funds.
 
     Venture Capital Fundraising
     Early stage venture capital funds were the most active in the third
 quarter with twenty-seven funds raising $3.5 billion. Eighteen balanced
 stage funds raised $1.1 billion. Domain Partners VII represented the most
 money raised in the quarter at $700M. In second place, M/C Venture Partners
 VI raised $550M.
     Follow-on venture capital funds continued to be the dominant
 fundraisers with 43 funds in the quarter. Nine new funds also raised money
 in Q3, accounting for 17% of the total number of funds raised.
                          VC Funds: New vs. Follow-On
 
                           No. of New      No. of Follow-on     Total
     2002                  56              115                  171
     2003                  50               95                  145
     2004                  56              147                  203
     2005                  51              156                  207
     2006 YTD              29              129                  158
 
     3Q'05                 14               48                   62
     4Q'05                 22               52                   74
     1Q'06                 11               54                   65
     2Q'06                 12               50                   62
     3Q'06                  9               43                   52
 
     Source: Thomson Financial & National Venture Capital Association
 
     Buyout and Mezzanine Fundraising
     Despite the lower level of fundraising in venture capital, buyout and
 mezzanine fundraising continued at a strong pace, raising over $22.86
 billion this quarter. Despite the absence of mega buyout fundraising this
 quarter, buyout and mezzanine funds remain on track to surpass the 2005
 fundraising total. The leading buyout fund was First Reserve Fund XI with
 $7.6 billion. Thomas H. Lee Equity Partners VI, L.P. follows with $2.2
 billion raised this quarter.
     "Despite the third quarter decline, it looks to be a record year for
 private equity fundraising as a whole. Fundraising is still on track to
 surpass the full-year 2005 totals as well as the combined fundraising
 totals of 2002, 2003, and 2004," said Alex Tan, Global Private Equity
 Research Manager for Thomson Financial. "While this is being primarily
 driven by the buyout market, the numbers suggest a continued appetite by
 limited partners for the private equity asset class as a whole."
     About Thomson Financial
     Thomson Financial is a US$1.9 billion provider of information and
 technology solutions to the worldwide financial community. Through the
 widest range of products and services in the industry, Thomson Financial
 helps clients in more than 70 countries make better decisions, be more
 productive and achieve superior results. Thomson Financial is part of The
 Thomson Corporation (http://www.thomson.com), a global leader in providing
 integrated information solutions to business and professional customers.
 Thomson provides value-added information, software tools and applications
 to more than 20 million users in the fields of law, tax, accounting,
 financial services, higher education, reference information, corporate
 e-learning and assessment, scientific research and healthcare. With
 revenues of US$8.4 billion, The Thomson Corporation lists its common shares
 on the New York and Toronto stock exchanges (NYSE:   TOC; TSX: TOC).
     The National Venture Capital Association (NVCA) represents
 approximately 480 venture capital and private equity firms. NVCA's mission
 is to foster greater understanding of the importance of venture capital to
 the U.S. economy, and support entrepreneurial activity and innovation.
 According to a 2004 Global Insight study, venture-backed companies
 accounted for 10.1 million jobs and $1.8 trillion in revenue in the United
 States in 2003. The NVCA represents the public policy interests of the
 venture capital community, strives to maintain high professional standards,
 provides reliable industry data, sponsors professional development, and
 facilitates interaction among its members. For more information about the
 NVCA, please visit http://www.nvca.org.
 
 

SOURCE Thomson Financial; The National Venture Capital Association

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