Private equity’s heavyweights increasingly want to try their hand at other pursuits than buy-outs, says Lex. CVC has recently followed the likes of Carlyle in establishing a debt management business that will package up leveraged debt into collateralised loan obligations. The groups may be able to use their brands to cross-sell to existing equity investors with a taste for debt. The industry is also exploring other avenues, including infrastructure investments and taking minority stakes in listed companies. Liability matching by pension funds mean there is ample demand for infrastructure funds and huge appetite for structure products and low default rates mean CLO funds have been enjoying returns on capital of more than 20 per cent. But private equity’s creation of yet more CLO funds, which help buoy demand for LBO debt and thereby fuel more buy-outs, calls to mind a perpetual motion machine.

This entry was posted by Helen Thomas on Monday, February 12th, 2007 at 4:57 and is filed under Private equity. Tagged with carlyle, cvc. Edit this entry.