Booming private equity industry facing stiff competition for assets
Private equity are paying as much as 11 to 12 times earnings, according to the Financial Times.
The prices are higher than the previous market peak in 2007.
The private equity funds are pulling in even more capital as hedge funds and other investment channels have fallen short.
But this means that competing private equity houses, swelled with larger funds from investors, are having to pay inflated prices for assets.
Max Justicz, head of financial sponsorships for the Amercias at UBS, said: “We are certainly seeing some signs that the new generation of leadership at some of these firms are willing to take more sizeable or concentrated investments.
”Investors are extremely focused on performance and giving the top quartile private equity firms considerably larger new fund size if they seek it.”
Private equity has had success in selling on UK brokers to US megabrokers or other private equity firms.
Marsh is estimated to have paid 17.4x JLT’s earnings in September last year, showing the high prices cash-rich US megabrokers will pay for brokers.
Subscribers read more