by Holly McKechnie, Investors’ Chronicle, January 31, 2025:
With interest rates and the cost of borrowing rising in recent years, times have looked more challenging for private equity investors. Such uncertainty, inevitably, has fed through into investor behaviour.
That’s reflected quite clearly by a drop-off in the level of asset sales within the sector. While 2021 saw record highs in terms of the volume of asset sales, such dealmaking stalled in 2022 and 2023 as the unstable macroeconomic environment and increased costs of capital took their toll. The value of exits fell from $1tn in 2021 to $616bn in 2022 and $309bn in 2023, according to figures from Bain & Company.
Private equity investment trusts listed in the UK have had their own struggles on this front. “The past year has been a slower period for exits and that is reflected in the one-year net asset value (NAV) numbers. For the most part, those are in low single figures, even for really good trusts like HarbourVest Global Private Equity (HVPE) and Pantheon International (PIN),” says James Carthew, head of investment company research at QuotedData.
A drying up of sales could ultimately prove a brake on returns, but some do hope to see better times ahead.
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