Close on the heels of the sudden closure of its central and eastern European operations and trimming staff in the wake of the global economic slowdown, Washington DC-based private equity firm, Carlyle group, has raised $14 billion of its $15-billion fund, announced in 2007.

The US buyout fund has not yet been closed as these funds are raised in several tranches, with each tranche having its own closure before the fund can finally be closed once the entire amount has been raised.

Commentators find it remarkable that a PE fund has been able to raise such a huge amount in the current economically stressed market conditions, when the amount raised has fallen to its lowest point since the first quarter of 2005; so far 117 equity funds have raised $82.3 billion in the third quarter of 2008.

Early this week, Carlyle Group shut its Warsaw office, that had opened in August last year, to oversee its central and eastern European fund-raising efforts and axed its new Asian leveraged finance team - making it one of the first PE firms to do so - as deteriorating market conditions and investor confidence stymied its efforts to put together even a single deal.

Carlyle says it would continue to consider opportunities in emerging European markets through its €5.4 billion Carlyle Europe Partners III fund, which closed last year, or its €530 million Carlyle Europe Technology Partners II fund, which closed this month.

Last month David Rubenstein, Carlyle co-founder and managing director, was reported to have said at a conference in Dubai that private equity's finest hour was on the horizon as more capital would be deployed in emerging markets as investors had begun to shun "submerging" markets.

However, another founder, Bill Conway, who acts as Carlyle's chief investment officer, had warned investors earlier this month that they were unlikely to see early returns on their investments, underscoring the decline in the business outlook of PE groups since the credit crunch.

Conway also predicted that very few new deals should be expected, qualifying that asset prices did not reflect the prevailing global economic realities.

When PE firms raise money, they receive commitments for future funding to finance new investments. However, with their profits from private equity investments drying up, many investors are finding it difficult to honour their financing commitments.

Rubenstein pleaded with investors not to default, as the likelihood of their not meeting commitments rises.

Conway said that debt for new deals or existing portfolio companies did not exist and that when the market did return, debt would cost at least 2 or 3 percentage points more than in the recent past.

Carlyle says that the most attractive opportunity today lies in buying back the safest debt in its portfolio companies.