Jacoline Loewen

The UK's Telegraph is reporting that TPG Capital has raised a $20 billion fund, one of the largest ever raised; Blackstone raised the world's largest ($21.7 billion) in August, and Goldman Sachs raised another $20 billion last April.  So what is going on?  Aren't private equity funds suppose to be dwindling without access to the credit they so desperately need from the banks? Apparently not.  

The credit crisis has created enough uncertainty in the public markets that investors are looking to private equity funds for the stability they crave.  Of course, it may be a while until we see the blockbuster, highly leveraged, billion dollar buy-out deals that we saw in 2007's "summer of love" (some say another year), but this does not mean that private equity funds are not active, quite the contrary.  

These funds continue to buy the collateralized debt obligations (CDO) that the banks so desperately look to offload.  Last month Lone Star was the latest private equity fund to buy CDOs from a distressed vendor, Merrill Lynch.  The financial firm sold $7 billion worth of CDOs at 22% of their face value to Lone-Star.  These deals make a very small splash in the pages of newspapers today; part of the credit is due to PE professionals' growing media-savvy in their efforts to keep their faces from front covers, and partly due to the complexity of these deals that really do not make for engaging reading in 500 words or less.