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
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
2/4 Cliff’s argument is that the low, smoothed, vol of private equity is part of its appeal, so investors may be prepared to pay up for it
My argument for private credit is different ✋
(FWIW I agree that vol ≠ risk, everyone should be honest with themselves about this)
3/4 Why?
- much better access to info, much faster, than corporate bond investors. E.g. monthly updates from the CFO. Much closer relationship than in a mass syndicated loan or corporate bond issue
- can step in sooner to exert influence and protect value of investments