The current global financial crisis will impact private equity in three waves: firstly, through a correction of EBITDA multiples in the short term; secondly, through a contraction in corporate earnings caused by a reduction in GDP growth rates; and thirdly, through some companies' need to seek refinancing in a more challenging credit environment, Adveq said at its annual press conference in Frankfurt. The Swiss-headquartered private equity fund of funds manager spoke in detail about its current market assessment and outlook for the private equity industry.
...Bruno Raschle, CEO of Adveq, said, "The world is currently experiencing financial markets turbulence that is unprecedented, at least for the past several decades, and this has a number of implications for the private equity market, both for existing and new commitments to the asset class. However, while it is clear that there will be a reduction in the return expectations for past vintage years in certain segments, we believe sharp reduction in valuations will in fact create attractive opportunities for both current and future private equity fund commitments in most private equity segments."
"In particular, we believe that these trends will, once again, increase the attractiveness of "traditional" private equity segments, namely small and mid-sized buy-outs and venture capital, while special situations funds will also benefit in the current climate," he added.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.