Partners Group's Urs Wietlisbach says private equity firms must concentrate on value creation and the most effective way is to grow revenue. Wietlisbach, whose firm has more than €30 billion invested in PE funds all over the world, says acquisition multiples are high, debt is worryingly cheap for blockbuster deals and parts of the industry are facing boom-time conditions last seen in 2006/7. It's hard to get multiple expansion, he said. And while leverage can go up in certain markets, revenue growth will be constrained because GDP isn't really growing quickly. Wietlisbach presented a Partners Group study of 250 PE firms to the Australian Private Equity and Venture Capital Association conference on Wednesday. He said 49% of PE firms were creating value through top-line growth, while 27% by cutting costs and 24% in managing financing and risk structures. (VIEW LINK)
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