Private equity the big winner from COVID

Private equity the big winner from COVID

Private equity buyers have never had so much cash to put to work; they are already looking to make new investments in companies that will survive the lockdowns.


Ryan Yang – Wealth Manager

One large and powerful group of investors, with plenty of money to put to work, need not panic quite so much at the precipitous falls stock markets have suffered due to the spread of the coronavirus Covid-19 and the lockdowns that have followed. Instead, its members are already looking for bargains amid the carnage, sometimes hunting alone, sometimes coming together in packs.

In that wonderful, bygone, sunlit age – back at the start of February – data from Preqin, Dealogic and other sources suggested that across funds dedicated to buyouts of well established companies; venture capital to support growth; dedicated infrastructure, property, special opportunities and distressed funds, managers of private equity had more than $2 trillion of dry powder – money that had been raised in large rounds of fund raising but not yet invested.

The guardians of these substantial pools of private capital are sitting on a lot of it. If governments can hold societies and economies together for now, central banks protect financial systems and their portfolio companies survive, then these private cash buyers will be big drivers of whatever happens next.

“This is different from what happened during the financial crisis in 2007/08 and the dotcom bubble in 2000,” Klaus Hessberger, co-head of the strategic investors group EMEA at JPMorgan, tells Euromoney.

In the last crisis, Hessberger worked in equity capital markets, seeking various pools of capital that overleveraged corporates might tap for rescue equity raisings and rights issues. Private equity had already done its work.

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