A wave of deals involving private equity groups might be on the cards as firms start to accept lower valuations on investments to generate cash.
Sales of portfolio companies by PE funds are well down from 2021 but investors are now said to be agitating for long-held investments to be realised.
New data from consultant Bain said investments in PE firm portfolios have reached a record US$2.8 trillion with urgency for sales increasing due to investors wanting cash returns before investing in new funds.
Scott Nuttall of KKR told the FT this is an opportune time for acquisitions, with reduced competition and lower multiples.
“It is in periods like this where we have historically earned our highest returns,” he commented.
Pete Stavros of KKR, told the FT, that there is a growing acceptance of lower valuations, with sellers facing pressure to achieve certain returns.
Asset sales between private equity groups, particularly in "sponsor-to-sponsor" deals, are also expected to pick as firms with spare cash pick up portfolios from more financially challenged rivals.