Private equity buyouts slow to a crawl in London
Following data revealing that private equity buyouts of British companies have virtually ground to a halt since early April, with only five deals announced this quarter, barely a tenth of those in the same period of last yearMark Spinner, partner at international law firm Eversheds comments:
“The private equity (PE) industry is still struggling with a combination of (i)wary institutional investors in private equity (LPs) many of whom have over committed to the asset class hoping to rely upon distributions to fund their commitments; (ii) a lack of debt liquidity combined with many banks preferring to withdraw funds from PE investee companies rather than extend facilities making senior debt both scarce and more expensive; and (iii) prices and vendor expectations that have still not fully adjusted to the current market.
“This 'toxic' combination has had a massive impact upon the appetite of many investors to deploy capital, particularly against a background of many of their investee companies coming under pressure and potentially needing additional capital as part of a refinancing down the line.
“Having said all that the PE industry still has money to invest and it will only take a slight improvement in confidence levels to free up debt markets, get the banks and investors to invest and improve activity levels.”
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