Less debt, more charm

According to this article, the outlook of private-equity managers is a difficult one. It’s said that private equity has prospered for 25 years, which owes to a favorable combination of circumstances---easy access to cheap credit, rising asset prices, a relatively stable economy and a friendly regulatory environment. However, in last year, credit was neither available nor cheap. It also points out that although it is true that equity prices did rebound last year, yet it was a double-edged sword. Private-equity firms found that deals were expensive and the markets were not quite strong. Private-equity firms realized only $58 billion last year, down from $324 billion in 2007. Further, the lack of “exits” from investments makes the situation even worse.

In summary, although some managers still have plenty of “dry powder” left which they raised funds in the boom years, they have to solve the problem--- attract or obtain more investments and re-built people’s confidence of the market---as soon as possible.