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Brakish

Discussion: How will the COVID-19 pandemic affect the private equity industry?

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Posted (edited)

How will the conronavirus pandemic and the resultant global economic collapse affect the private equity industry? The only honest answer is that nobody really knows.

The industry has been working hard at shedding its image as corporate raiders and barbarians at the gate who buy and leverage and strip assets to ones that are good custodians of the portfolio companies that they invest in and the only honest answer is that nobody really knows how this is going to impact any sector.

As a health care crisis the most recent the Spanish flu is a hundred years old and so offers little use to measure its global sweep and impact as an economic event it raises many unknowns about how the sudden demand shock and the existential dread will affect business activity and the consumer behaviour especially if the lockdown persists for an extended time through the various levels here in South Africa.

Yet a close look at the impact of previous economic shocks can provide some clues as to how private equity funds and their limited partners will behave in a period of rapid contraction, one thinks of the global financial crises here.

 

 

Edited by Brakish

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