You know from here and here that private equity is coming for your savings. Funds that were once a playground for endowments, foundations, pensions, and the big wealthy players are now coming for your retirement savings. If you’ve paid attention, you have noticed that private equity is having a hard time selling the goods. Not enough buyers can participate, especially when the market is tanking. Solution? Sell the crap to the smaller guy. Stay tuned as private equity looks for an exit plan to line their pockets with your money and charge egregious fees while doing it. The market for private equity deals is seizing up, report Matt Wirz and Miriam Gottfried in The Wall Street Journal:
The longer the deal logjam lasts, the harder it will be for firms to hand money back to clients such as pensions and endowments. The amount of unrealized value the funds owe their investors has hit record levels, according to an analysis by credit-ratings firm Moody’s Ratings. That makes it tougher for the firms to raise new funds.
“We aren’t even in a recession now, and we’re already at a point where things are incredibly challenging,” said Hugh MacArthur, chairman for private equity at Bain & Co.
Firms are sitting on a record 29,000 companies worth $3.6 trillion, half of which they have owned for five years or more, he said. Clients are becoming less willing to make new investments and buyout fundraising dropped by almost 25% last year, he said.
Even Blackstone is feeling the pain. The private-equity giant, which reported first-quarter earnings Thursday, said market volatility might lead North American institutional investors to “slow down decision-making” about allocating money due to expectations of lower payouts. The firm has other fast-growing businesses including private lending and private wealth.
Read part I here.
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