Much has been written and spoken lately about the travails of the private equity industry - not least by the buy-out kingpins themselves, led by KKR co-founder Henry Kravis who, as the FT notes Wednesday, gave an “adapt or die” warning to the “inaptly named Super Return private equity conference in Berlin”. (As Lex wryly noted, calling a conference ” SuperReturn ” was, even in the good times, asking for trouble).
KKR, like other big buy-out groups, will be forced to do smaller deals, use less debt, and to diversify into other areas, such as infrastructure and corporate lending, he warned, highlighting how the biggest buy-out houses are being forced to fundamentally rethink their business models after years of relying on cheap debt to fund big acquisitions.
Ironically, Kravis’s remarks came around the same time rival firm TPG was finally giving up on long-running talks to sell a stake in itself to investors led by the Kuwait Investment Authority - up to recently one of the world’s most active sovereign wealth funds - and two Californian pension funds.
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