The WSJ recently interviewed senior leadership at Advent International, a Boston-based private equity firm looking to deploy $30 billion, to better understand how private equity reacts in a downturn.
Advent International managed to close on its first $10 billion fund (Advent’s 6th global fund overall) in the spring of 2008, which positioned the firm to take advantage of buying opportunities in the absence of new funds being raised during the Great Recession. From September of 2008 through the end of 2010, Advent International was the most active private-equity group in the world.
Why we haven’t seen a “wholesale revaluation” in the private markets.
Between 2008 and 2010 the financing markets froze. Initially there was no debt financing available, and then there was only senior debt. To date through this downturn, we have not yet seen that contraction in debt markets. Per the partners, spreads have widened and interest rates have ticked up, but “aggregate borrowing costs really haven’t changed.”
If high rates of inflation persist and we have a recession, “then clearly you will see a full revaluation within the private markets.”
Click on the link below for Advent’s take on investing in Europe and why the firm refuses to go public.