Thread by @DuncanLamont2

1/6 Four perils for #PrivateEquity today-or are they?

1. Recessions are bad, right?

Nope. Funds raised in recession years have done very well. Capital is deployed over several years so get to pick up assets at beaten up prices, and sell later in recovery phase

#SuperReturn

2/6
2. Stagflation is worse though?

For some sectors yes but not all (based on analysis of public market sectors). Some could do well

- healthcare
- consumer durables
- anything that can save companies money (e.g. some business services)

3/6
3. Closure of exit windows (IPOs, corporate M&A) is a challenge

But could lead to a rise in secondaries. Both GP-led (where sell to another vehicle run by the same GP), and traditional LP-led (where an LP sells their stake to another LP) likely to rise

4/6
4. Will fundraising excesses come home to roost?

Risk for some areas-especially late stage venture, where $$$ raised has been 🔥

-> led to nearly 10x increase in late stage company valuations in last 5yrs 😬

Early stage fundraising more contained, valuation rise less nuts

5/6
Similar story for buyouts. Large buyout fundraising ran hot but small/mid buyouts didn’t

-> small buyout valuations have been more stable

6/6
Private equity isn’t immune to forces buffeting public markets

But some parts of the industry could prove more resilient, and may even thrive

Read on for more details:
schroders.com/en/uk/tp/marke…