Monday 2 February 2009

Private equity assets melting away

Private equity houses are poised to announce huge writedowns on their holdings in the coming weeks, with some industry figures warning the downgrades will only be the start of a painful bloodletting. (PDF)

3i, Europe’s largest listed private equity group, said last week the value of its 50 largest investments fell 21 per cent in the fourth quarter of 2008, while EQT Partners, the Nordic buy-out group, wrote down its EQT Fund IV by 50 per cent.

The moves are likely to be the start of an avalanche of downgrades as the private equity industry, which made only tiny writedowns in the June and September quarters, catches up with reality in the public markets.

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