Slowdown in dealmaking leaves private equity with record unsold assets

Stay informed with free updates

Simply sign up to the World myFT Digest — delivered directly to your inbox.

Good morning.

Private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3tn, as a sharp slowdown in dealmaking creates a crunch for investors looking to sell assets. 

The numbers, revealed in consultancy firm Bain & Co’s annual private equity report, show how rapidly the industry has grown over the past decade, as well as the challenges it faces from higher interest rates that have increased financing costs. 

“It may be another two to three years before the money starts to come back [to investors],” Hugh MacArthur, chair of Bain’s private equity practice, told the Financial Times. “It’s probably the number one concern in the marketplace right now.”

Last year, the combined value of companies that the industry sold privately or on public markets fell 44 per cent on 2022 to its lowest level in a decade. Read the full report.

Here’s what else I’m keeping tabs on today:

• UK: Deadline for the CMA and Ofcom to report back to the government’s media secretary Lucy Frazer regarding the anticipated acquisition of Telegraph Media Group by RedBird IMI. The International Booker Prize longlist is also announced.

• France: The ninth OECD Investment Treaty Conference opens in Paris.

• EU: Eurogroup ministers meet in Brussels.

• Economic data: The UK’s Office for National Statistics publishes its annual review of the “shopping basket” of goods and services that it uses to measure consumer price inflation indices.

• Companies: Oracle releases third-quarter results.

Join sustainability officers and politicians at Climate Capital Live on 13-14 March in London or online, for advice on how to implement a robust net zero strategy and push ambitious climate action forward. Register today and save 10 per cent with code NEWS10.

Five more top stories

1. Thomson Reuters has an $8bn war chest to spend on acquisitions and investments in artificial intelligence, its chief executive Steve Hasker has told the Financial Times. The media and data group is betting that the technology will transform rather than undermine its business of supplying information to lawyers, accountants and other professionals. Read more from the interview on the company’s AI plans.

2. The EU is at “higher and higher” risk of systemic financial shocks from climate change, the European Environment Agency’s head has warned. A long-term global average temperature rise of 1.5C from pre-industrial levels would correlate to 3C across the region, according to the EEA, which warned that without “decisive action”, “hundreds of thousands of people would die from heatwaves, and economic losses from coastal floods alone could exceed €1tn a year”.

3. Portugal’s centre-right Democratic Alliance scored a narrow win in parliamentary elections yesterday but fell far short of a majority, turning the far-right Chega party into a potential kingmaker. The result marks another important advance for the right in the EU, where conservatives have won elections or joined coalitions in Italy, Greece, Sweden and Finland in the past two years. But it also pitches Portugal into a period of political uncertainty and potential instability.

4. Europe’s market for initial public offerings has made its strongest start to a year since the pandemic, as new highs for stocks and the prospect of interest rate cuts raise hopes for a sustained recovery in listings. Companies have raised $3.2bn in European IPOs since January, more than double the amount over the same period last year, according to LSEG data. Here are some of the high-profile companies lining up to launch IPOs.

5. At least 500 tonnes of harmful metals leak into the Welsh environment each year from abandoned mines, according to government estimates obtained by the Financial Times, sparking calls for the UK government to take urgent action to tackle the legacy of Britain’s mining past. Metals dispersed by these mines can accumulate in soil and floodplain used for homegrown and agricultural food production. Read more from the study’s findings.

News in-depth

An estimated 300,000 people face famine and increasingly desperate conditions in the north of Gaza, where hunger and starvation have been most acute. Ibrahim al-Kharabishy, a Palestinian lawyer, considered himself fortunate when he was able to bake for his family with pigeon feed. But even that disappeared from the market weeks ago, leaving his family to bake with ground hulls of soyabeans usually used as livestock fodder. “Hunger has reached catastrophic levels,” said Jamie McGoldrick, the UN’s humanitarian co-ordinator for the occupied Palestinian territories. “Children are dying from hunger.”

We’re also reading . . . 

Chart of the day

Two weeks after its shares began trading on the Nasdaq, Lotus Technology is down by two-thirds. Yet far from being a surprise, the collapse has a familiar sensation for investors who bought into other businesses listed on global stock markets by Geely. In recent years, the ambitious Chinese group has listed shares in Volvo Cars, Polestar and ECARX. All remain deeply under water. The fall, if sustained, raises questions over the company’s future ability to tap public markets to raise funding as it pushes further into the expensive business of developing electric vehicles.

Take a break from the news

Oppenheimer was the big winner at the Oscars last night, winning best picture and six other prizes. Here’s a round-up of the Academy Awards from our man in Hollywood, Christopher Grimes.

Additional contributions from Emily Goldberg