The private equity landscape is likely to change in the post-Covid world, with the greatest rise in transactions in distressed strategies, according to Intertrust's Global Private Equity Outlook 2020 report.
Intertrust interviewed 143 private equity professionals across Europe, North America and Asia to identify the risks and opportunities facing the industry in light of the pandemic, and the challenges faced by private equity managers in the next 12-24 months.
An overwhelming majority (92%) of private equity professionals surveyed expect to see a rise in the volume of distressed fund transactions over the next 12 months due to the impact of Covid-19. Yet almost half (46%) believe that mismatches in valuation expectations between buyers and sellers will restrict deal flow.
The research was carried out against record levels of dry powder – Preqin reported at the start of the year that dry powder rose for a seventh consecutive year to $276bn in 2019, three times the figure in 2012.
Unsurprisingly, many respondents predicted a rise in opportunities and potential deals. Four fifths (79%) said lower valuations present a buying opportunity for active investors.
Intertrust’s Managing Director in Guernsey, Marie McNeela (pictured), said the Channel Islands’ experience in the funds space will ensure PE remains an active area for practitioners.
“There’s no doubt the landscape has changed and our results show that PE professionals are cognisant of that," she said. "But the results also demonstrate confidence that capital will be invested, and distressed strategies are likely to be a key area of focus for managers.
“Guernsey and Jersey have huge experience in end-to-end fund administration and that proven quality, coupled with continued growth of the Channel Island funds industry, is likely to result in a continued growth of our PE business.”
• To download the full Global Private Equity Outlook 2020 report, click here