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Private Equity Resilience

As markets enter a period of severe disruption, private equity brings significant firepower to weather volatile times. Reflecting on the financial crisis, dry powder has grown from $842BN in 2008 to over $1.4TN today, with a record breaking $77BN reserved for distressed debt funds.

Firms have also diversified over the past decade, targeting infrastructure, real estate and private credit. During past economic uncertainty, private equity stepped in as banks retreated from lower and middle markets. This lending strategy is now an $800BN market which is expected to double over the next three years, making this an attractive approach as credit is set to become undervalued.

There has also been an increased focus on operational excellence; a 30% rise in operating partners attests to this as well as the formation of sector specific funds. With specific expertise, firms have adopted a more hands on role to ensure full value is being achieved for the duration of the investment lifecycle and have deployed knowledge to successfully target turnarounds and buy and build platforms.

Private equity is no stranger to displaying innovation and resilience in challenging times; whilst the future outlook is more clouded than ever before, their position to seize opportunity remains strong.

April 1, 2020