by Val Cipriani, Investors Chronicle, August 22, 2025:
The private equity industry has a problem: in an environment of higher interest rates and economic uncertainty, doing deals is no longer as easy as it was in 2021..
Despite the challenging backdrop of the past three years or so, many private equity trusts have continued to sell assets comfortably above valuation levels, as the chart below suggests..
Exits also depend on the stage the portfolio companies are in, and generally on the manager’s strategy.
For example, as at January 2025, HarbourVest only had about 12 per cent of its portfolio in the “mature” phase, which it defines as the period when the underlying private equity funds it invests in are typically selling investments.
But even taking all of that into account, “it is undoubtedly true that a lack of exits has been weighing on the net asset values (NAVs) of listed private equity trusts recently,” says James Carthew, head of investment companies at QuotedData..
“While it may be frustrating to see NAVs flatline, shareholders in private equity vehicles should not lose sight of the value creation going on in the underlying businesses. Uplifts are coming, they are just delayed,” argues Carthew..
Carthew likes Oakley Capital and HgCapital, on the basis that managers that have direct control over their underlying investments tend to be “better able to navigate trickier macroeconomic environments”.
These trusts “also have a deliberate bias to parts of the economy that are experiencing structural growth, which helps make these businesses more resilient,” he adds.
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