Investing
Private Equity Faces Pockets of Distress for Long-Held Assets
- Continuation funds raised in recent years running into trouble
- Valuations have tumbled while debt trades at distressed prices
Private equity firms are increasingly turning to continuation funds to help them hang on to prized assets for longer if they believe there’s more upside.
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Private equity firms’ strategy of shuffling assets to buy more time for investments to pan out is starting to show signs of weakness.
More than 100 so-called continuation funds were raised between 2019 and 2021 to move portfolio companies from one private equity vehicle to new ones backed by fresh capital. Some are now running into trouble amid a sluggish dealmaking environment and declining asset values.