Pension Plans Exposed to Private Equity

Deeply underfunded pensions stretching for yield in an overvalued asset class make private equity “everybody’s business.” Private equity has raised record sums and invested at record multiples over the last 5 years. Per a recent edition of Grant’s Interest Rate Observer, the pensions plans exposed to these high valuations and excessive leverage are unlikely to achieve the returns underwritten: “The disappointment will ripple far and wide.”

The p.e. party is far from over:

“‘If it’s possible, fundraising has been too good, with an unprecedented $3 trillion raised over the past five years,’ relates Hugh MacArthur, head of global private equity for Bain & Co. According to Preqin Ltd., 3,037 p.e. funds are currently seeking $948 billion in new capital, compared with year-ago totals of 1,998 funds looking for $676 billion.”

private equity
Source: Jim Grant | "Buck privates" | Grant's Interest Rate Observer | 08/10/2018 | Visit