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Distress investing: Crime scene investigation

The ultimate murder weapon is almost always leverage and financial sponsors the main culprits

    • Sewage treatment works, owned by Thames Water, in west London. In cases where debt-ridden companies provide vital services, governments usually have to step in, as the UK authorities are expected to do in a potential renationalisation of Thames Water.
    • Sewage treatment works, owned by Thames Water, in west London. In cases where debt-ridden companies provide vital services, governments usually have to step in, as the UK authorities are expected to do in a potential renationalisation of Thames Water. PHOTO: REUTERS

    Sebastien Canderle

    Published Fri, Oct 11, 2024 · 10:00 AM

    IN THE underbelly of private markets lies the main culprit behind corporate failures: defective capital structuring.

    Frequently the result of human failings, the widespread overcapitalisation of startups and quasi-universal overleveraging of buyouts have led to a deep-seated zombification of private markets.

    With interest rates remaining at or near 20-year highs, ballooning interest expenses will continue to cause cash-flow incontinence. A whole new landscape for private capital fund managers and their portfolios could shape out.

    Private debtDebt restructuringBuyouts

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