Private Equity Firms Are Getting Rid of Their Equity
Companies are rushing to raise debt to make hefty payouts to their buyout-fund owners. It’s leaving the PE industry with less skin in the game.
Clarios International raised debt to pay a $4.5 billion dividend to its buyout-fund backers.
Source: ClariosPrivate equity firms are called that because they own stakes in the companies they buy. Today, this assumption is looking ever more outdated.
As buyout funds struggle to sell businesses in a moribund M&A market — not helped by President Donald Trump’s tariff gyrations — many are turning to cash-rich credit investors for money to pay dividends to themselves and their backers. A few are getting back as much as they first invested, if not more, in effect leaving them with little or no equity in some of their biggest companies.