Private Equity Today: Key Insights

Evolution of Private Equity

• Increased Competition: The private equity industry has matured significantly over the past decade, becoming more competitive.
  • Many more sponsors and strategies are now present in the market.
  • Simple improvements in capital structure are no longer sufficient to generate attractive returns.

Current Market Environment

• Active Business Improvement: To achieve attractive returns, active enhancement of business operations is crucial:
  • Growth in revenue, market expansion, and customer base increase are essential strategies.
• Interest Rates:
  • Interest rates have increased by 500 basis points in approximately 18 months.
  • Rapid changes have introduced uncertainty, valuation gaps, and volatility.

Investment Considerations

• Future Outlook:
  • Concerns about potential recession and geopolitical dynamics are prevalent among investors.
  • Asset selection is crucial in this complex landscape.
  • Importance of data in identifying key assets and sectors that will grow and be resilient.
• Promising Sectors:
  • Focus on sectors like digital infrastructure, e-commerce, and life sciences.
  • These industries are expected to grow faster than inflation and GDP, with strong resilience.

Private Equity Performance

• Historical Performance:
  • Over various market conditions, private equity has consistently outperformed public markets.
• Current Opportunities:
  • The economy is still growing, and businesses continue to require funding.
  • Current conditions allow for acquisition of better businesses at lower valuations.

Strategic Positioning

• Investment Growth:
  • Investment opportunities are expanding.
  • With significant scale and resources, there's potential to deploy more capital in the current market environment.