Investors question valuation and liquidity of private equity holdings, says MSCI executive

[SINGAPORE] Sophisticated asset owners are raising urgent questions on the valuation and liquidity of their private-asset holdings, particularly private equity (PE), where the pressure for exits remains intense, said MSCI chief research and development officer Ashley Lester.

“The rate of distributions of PE funds has fallen from a low-20 per cent rate in 2022 to 2024, to around 7 per cent in the first quarter,” he said. “That makes liquidity questions much more pressing and also raises questions about the valuation of those companies,” he added, also noting that liquidity in PE has fallen.

In addition, PE funds also grapple with a leverage squeeze – that is, buyouts funded via higher debt loads face elevated coupon costs that threaten their ability to cover interest expenses.