Gulf private equity firms switch from buyouts to lending

Private equity firms are shifting their focus to providing the capital to help companies grow, notably in the Gulf, as financing for the headline-grabbing buyouts of recent years dries up.

“Some firms were riding the credit bubble and not thinking about creating value,” says Antoine Drean, the chairman and chief executive of Triago, a French private equity firm that does business in the region. “Now that credit bubble is gone.”

Only two years ago, loans to buy stakes in private companies were easy to get. When the financial crisis struck last year, however, all kinds of financial firms suddenly found themselves unable to raise cash for deals. The bank loan market imploded and investors started to shun the high-yield bonds that were once a cornerstone of buyout financing.