The New York Times reports that billions of dollars are pouring into new private equity funds worldwide. In Europe Kohlberg Kravis is raising a 7.7 bn euro fund, and in Asia CVC Capital Partners is raising a $5 bn fund and TPG a $4.2 bn one.
Take Asia – there is currently $35 bn sloshing around looking for the right deal. In the first half of 2007 $15.4 bn was committed to the region, a rise of 57% over the same period in 2006.
Hoo boy! Perhaps this is why many of my former venture capital colleagues are now private equity players. There is a saying in the industry that it takes as much effort to pull off a successful seed deal as a mega deal.
But is it all rosy? Contrarian investors take note: there seems to be somewhat of a herd mentality at play.
The NY Times article quotes research undertaken by the Center for Asia Private Equity Research – 22 deals worth $38.9 bn failed in the first half of 2007.
Regulation, competition and takeover targets are stiffening to the private equity barrage.