In a recent interview with Bloomberg Television, Scott Kleinman discussed the challenges faced by private equity investors in the current return environment. He warned that there may be a “dry spell” ahead for investors as deals from a more favorable time period begin to unravel. This is due to the need to adjust financial projections resulting from deals made during the zero-interest rate era.
Private equity firms may find it difficult to achieve the returns they were hoping for in the past. Investors are eager to see returns on their investments, but managers may be hesitant to sell at a perceived discount. As private equity firms face pressure to deliver returns, investors are increasingly seeking opportunities to liquidate their investments. However, managers are wary of selling at a price they feel undervalues the investment.
At the SuperReturn International conference in Berlin, Kleinman expressed concerns about the future of private equity returns. He cautioned that it may be challenging for firms to realize the kind of returns they were once accustomed to. Creative strategies may need to be employed to unwind deals, especially given the uncertain market conditions for initial public offerings and high private buyer debt costs. Despite these challenges, Apollo Global Management, under Kleinman’s leadership, remains well-positioned to navigate the changing investment landscape with $65 billion in dry powder available for new opportunities. With over $670 billion in management assets, Apollo is poised to capitalize on potential distressed investments in the coming years.
