Private equity: Five lessons from the GFC
Add BT as a preferred source
UP UNTIL the 2008 credit crunch, the conventional recipe for success in private equity (PE) was straightforward: Just pour in debt and stir. A generous dose of leverage typically spiced up the financing of a transaction.
But the global financial crisis (GFC) turned this money pie into mush. Government-backed purchases of toxic assets – funded by central bank purchases of government bonds – eventually engineered a comprehensive bailout of distressed borrowers and other heavy debt users. With loose monetary policies throughout the 2010s, leverage returned with a vengeance.
What to expect from a downturn
So if a recession comes, how can the lessons of the GFC inform PE practitioners facing a formidable debt wall and stubbornly high interest rates? Here’s what to watch for:
TRENDING NOW
CSE Global independent director quits after clashes with chairman Eugene Lai over board refresh
Cat A COE rate exceeds Cat B for third time in 4 months; premiums largely down
What’s wrong with Orchard Road? Experts weigh in on the street’s cachet and its future
Singapore workers experiencing rising anxiety; signs of fallout from pressure to use AI
