Private equity’s world has turned upside down since the start of the credit crisis. All the stats show that deal flow has dropped off a cliff and those deals that have got done are smaller and the equity cheques larger. At the same time, restructuring situations are mounting as firms face the uneviable choice of injecting more equity or face losing their investments to the banks.
The upshot is that buyout funds raised in rosier times are no longer suited to the current environment, if indeed they have any capital left at all.
As I have discovered, Nordic Capital, Investindustrial – the Bonomi family’s southern European buyout firm – and Graphite Capital are all asking investors for more money as they look to adapt to the new climate.
Many investors are currently over-committed to the asset class, meaning that the reaction to requests for new capital is likely to be mixed.