Inflation impacts and private equity, KPS scores 8.5x return amid surge in golf interest

The Wire

May 13, 2021

Inflation impacts and private equity, KPS scores 8.5x return amid surge in golf interest

Happy Thursday!

We wrote last week about the potential impacts a sustained inflationary environment would have on private equity, and how GPs are factoring in those potential scenarios into their new deal calculations.

That was before the Labor Department reported that the consumer price index increased 0.8 percent in April, the biggest jump since 2009. The core CPI, which excludes food and energy, rose 0.9 percent from March, the biggest jump since 1982.

I’m interested in learning more about how inflation could affect the industry around issues like valuation of GP management companies and fundraising in general. We heard from Peter Martenson, partner at placement agency Eaton Partners, who said other strategies that act as inflation hedges could become popular with LPs.

“Oil and gas [are a] great inflationary hedge … because obviously oil rises with [inflation],” he said. “It’s the same with metal and mining or commodities. In those cases, we’ll see the investors that truly want to get into an inflation hedge directly for their overall portfolio. They’ll invest into those types of areas such as farmland, timberland, infrastructure, etc., because that is for all intents and purposes an inflationary hedge outside of its normal use as a product.”

That’s it! Have a great rest of your day. As always, hit me up with that good gossip, tips, feedback or whatever at cwitkowsky@buyoutsinsider.com or find me on LinkedIn.

Read the full wire commentary on PE Hub...

Also of note (may require subscriptions)

Sentenced: Ex-TPG big Bill McGlashan was sentenced to three months in prison for his role in the college admissions scandal, writes the Wall Street Journal. McGlashan admitted to paying $50,000 to William Singer to fix his son’s wrong answers on a college entrance exam. Read it here.