Buy-out groups face $140bn sale

Investors are likely to sell about $140bn in private equity investments – more than 10% of the total – in the next 18 months, with many of them sustaining losses. Pension funds, endowments, banks and insurance companies are poised to sell down their private equity portfolios just as their value is falling. At the same time, new accounting rules will this year require private equity funds to mark their investments to market, driving a further likely year-end drop in value. David de Weese, partner at buyout firm Paul Capital, foresees sales of $130bn-$140bn from “motivated sellers” in the US and EU over next 18-24 months. Other industry analysts suggest the figure could be higher. Private equity sellers have in recent months gained only about 50 cents in the dollar on the face value of their investments, according to a report by investment bank Cogent Partners. That compares with more than $1 last year and 84 cents in the first half of this year.

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