The rich feast of investment funds

Blackstone, CVC Capital Partners, Apollo or Ardian: the appetite and ambitions of private equity giants are constantly growing. On Sunday, November 20, the American KKR launched an assault on the Italian operator Telecom Italia (53,000 employees), with a buyout proposal of nearly 11 billion euros, to which are added more than 22 billion in debt to be refinanced. If this transaction were to be completed, it would constitute the largest leveraged buy-out (LBO) ever in Europe.

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Just before, his compatriot Bain Capital had almost got his hands on Equans, the multitechnical services pole put on sale by Engie: it was necessary for Bouygues to offer the staggering sum of 7.1 billion euros to win this company which employs 80,000 employees. In the United Kingdom, financiers are sweeping over the supermarket chains, from Asda to Morrisons. How far ? According to Sunday Times, the American Apollo fund would now be eyeing Marks & Spencer.

Big winners from the health crisis

In fact, until the recent eruption of the Omicron variant, records were falling one after another for private equity. According to the professional association Invest Europe, the KKR and others invested 57 billion euros in the first half of the year in Europe, a peak which erases the precedent set at 55 billion in the second half of 2019. Forgetting the dark years following the financial storm 2007: this time, investment funds are the big winners from the health crisis.

First, with massive injections of liquidity from central banks, financial markets are thriving, from debt issuance to IPOs. The more the Fed or the European Central Bank injects liquidity, the more rates fall and the more investors entrust capital to these conjurers who promise returns of up to 20%.

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In addition, the health crisis has boosted the portfolios of large investment funds. “For five years, many of them had invested in the health and tech sectors, whose values ​​have soared with the pandemic”, underline François Guichot-Pérère and Charles Andrez, managing partners at Lazard.

Result ? Right now, Blackstone is looking to raise more than $ 30 billion (€ 26.5 billion), an amount that Carlyle and CVC also want to approach. In September 2019, when the firm founded by Stephen Schwarzman had raised $ 26 billion to spend on business buyouts, this record seemed impossible to beat. These mega-jackpots lead funds to target bigger and bigger companies. But they also have to move quickly to use capital with a shelf life. Hence the frenzy of current redemptions.

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