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| Blackstone results reflect impact of coronavirus
Blackstone, the world’s largest alternative investment manager, published its results this week, showing its private equity division saw assets reach USD174.7 billion in Q1, but performance was hit by both the economic impact from Covid-19 and dislocation in energy markets.
Nevertheless, Blackstone has more than USD150 billion in dry powder – “more than anyone in our industry” – CEO Stephen Schwarzman said. He emphasised the firm has perviously weathered difficult periods during its 35-year history – particularly the global financial crisis – “only to emerge stronger than before.”
With this in mind, this week's feature by Karine Wasteson examines what private equity firms and start-ups could learn from the 2008 global financial crash in preparation for the months and years ahead.
Covid-19 continues to dominate headlines as governments attempt to mitigate some of the economic damage wrought by the virus. On Tuesday, it emerged that, due to an unforeseen loophole, the UK government’s scheme to provide GBP125 billion in financial aid to early-stage businesses will not provide cover for many affected start-ups.
Also this week, a Pitchbook Data study revealed a new Q1 decade peak in private equity deal volume, with European bolt-on activity accounting for 63.4 per cent of deal volume during the quarter.
The Covid-19 related slowdown in activity is expected to show later this year, with experts predicting that the poandemic could lead to a drop in global private equity secondary deals as high as 50 per cent, as James Williams notes in his feature this week.
Deals meanwhile, are still going ahead: growth equity tech investments seem to be holding up well, compared with other deal types that are currently on hold. The private equity team at Unigestion commented that it doesn’t expect any transactions until mid-summer, finding it challenging to underwrite deals, and stated that it’s “better to wait than do a bad deal”.
We also saw some activity in the Netherlands and the Nordics this week: Holland Capital sold its portfolio company Inno4Life, to Swiss company Dec Group, while Foresight Group secured co-investment from four institutional investors to finance a greenfield onshore wind project in the north of Sweden.
Private Equity Wire
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| What, if anything, can we learn from the 2008 global financial crisis? | | Fri | 24 Apr 2020, 14:05 | | With a recession more severe than the downturn caused by the global financial crisis of 2008 – and perhaps even the Great Depression – looming large, the temptation to look to the past for clues as to how the coronavirus crisis will play out is understandable. |
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| Covid-19 could lead to 50 per cent drop in global PE secondary deals | | Fri | 24 Apr 2020, 14:05 | | Global private equity secondary deal flow could fall by as much as 40 to 50 per cent this year, compared to 2019, as the repercussions of coronavirus play out over the next few quarters. But for those operating in the lower middle-market, discounted opportunities could be highly attractive. |
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| Consortium backs Foresight's wind project in Härjedalen | | Fri | 24 Apr 2020, 14:05 | | Foresight Group has secured co-investment from a syndicate of four institutions investing alongside Foresight Energy Infrastructure Partners to finance a greenfield onshore wind project in Sweden. |
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 | | Private Equity Wire LIVE: A virtual event with real insight What are the key issues COOs are focusing on, in light of the Covid-19 pandemic? What metrics are COOs using to measure the impact of operating partners on company performance? And what trends and challenges are emerging for Operational Due Diligence? |
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