Global private equity dealmaking tailed off in the first quarter of 2010, although it is up substantially from the same quarter last year, according to a new report from research firm Preqin.

The firm reports that there were a total of 307 private equity deals announced in the first quarter of 2010, with an aggregate value of US$26.6 billion, which is about double the value of the deal flow in the same quarter last year. However, this also represents a 35% decrease from the fourth quarter of 2009, which saw 349 announcements with an aggregate value of US$41.2 billion.

“Although global private equity-backed deal value is down 35% from the previous quarter, Q1 2010 data does represent an improvement from this point last year, and would indicate that the market is continuing to slowly recover,” said Manuel Carvalho, deals data manager at Preqin. “This quarter has been notable for a surge in the number of secondary buyout deals, with the aggregate value for such transactions during this quarter already surpassing that for the whole of last year.”

Almost half of all deals globally during Q1 2010 were leveraged buyouts, Preqin says, and this accounts for 60% of the aggregate deal value worldwide during the quarter. Additionally, it notes that 50% of all buyout deals globally in the quarter were valued at less than US$100 million. “Mid-market and large deals accounted for the majority of capital invested by private equity firms in Q1 2010, with deals valued at US$500 million-US$999 million and over US$1 billion representing 33% and 29%, respectively, of total aggregate deal value globally,” it reports.

The firm also reports that private equity fundraising of US$50.4 billion in the quarter “represents a slight improvement” from the previous quarter. “However, fundraising is still occurring at a slow pace, and it is taking longer for the improving global economic conditions to translate into an improved fundraising market than many expected,” it says, adding that it expects a more robust recovery in the second quarter.

“A major factor driving fundraising is the cash-flow situation for limited partners in private equity, such as pension plans and endowments. Looking at the levels of capital being called up and distributed to investors reveals that investors have experienced a significant reduction in the levels of both capital being called up and distributed from existing investments when compared to recent years,” it says, adding that in the past two years investors have seen the level of capital being called up far outweighing capital distributions. “As a result, investors have more capital sitting in existing investments than originally anticipated, and have less capital to commit to recycle into new vehicles as a result.”