Global Private Equity Performance Series
In most of modern finance, things tend to matter only if they can be measured precisely and frequently. By contrast, …
Oct 01, 2019
“If you want peace, prepare for war”, goes the Latin military adage. It could well apply to the preservation of wealth during a stock market correction or a recession by planning when the economic environment is benign. Private equity offers interesting strategies for such a purpose, helping investors capitalize on opportunities while other assets suffer from the downward phase of a macroeconomic cycle.
Distressed debt investing is arguably the strategy that capitalizes the most on downturns. The purpose of this type of investment is to take control of a company by acquiring some of its debt at a significant discount during a bankruptcy procedure. The distressed debt fund manager and the management of the company engineer a restructuring plan, which is submitted to the bankruptcy court for approval. This plan usually implies that some or all of the debt acquired by the fund will be converted into equity, after washing out previous owners. The fund the company, restructure it and resell it once the business is on a firmer footing. Companies acquired are therefore fundamentally sound, but suffer from specific adverse events or an excess of debt. They usually have significant assets and an otherwise sound business model.
Distressed debt investing requires efficient and rather quick bankruptcy processes. Proceedings have to be predictable and decisions enforceable. This strategy also assumes that creditors are willing and able to sell their claims at a discount and that their ranking is only determined by the seniority of their credits. Many jurisdictions do not provide such a context. Some, like France, provide a specific status to public claims (they are “super-privileged” and non-negotiable).
Figure 3 – Pooled average TVPI, RVPI and DPI of distressed debt funds
Global Private Equity Performance Series
Oct 01, 2019
AI²: Alternative Investments Meet Artificial Intelligence
The profitability and investment potential into AI is not a contentious topic. But to what extent could AI disrupt and …
Sep 26, 2019
Private vs. public:
co-movements are stronger than you think
The quarterly movements of multiples of US LBO funds and major US stock indexes appear to be significantly positively correlated, …
Sep 20, 2019
Please read this page before proceeding, as it explains certain restrictions imposed by law on the distribution of this information and the jurisdictions in which our products and services are authorised to be offered or sold. It is your responsibility to be aware of and to observe all applicable laws and regulations of any relevant jurisdiction.
By confirming that you have read this important information, you also:
(i) agree that all access to this website by you will be subject to the disclaimer, risk warnings and other information set out herein; and
(ii) agree that you are the relevant sophistication level and/or type of audience intended for your respective country or jurisdiction identified below.
The information contained on this website (this “Website”) (including without limitation the information, functions and documents posted herein (together, the “Contents”) is made available for informational purposes only.
The Contents have been prepared without regard to the investment objectives, financial situation, or means of any person or entity, and the Website is not soliciting any action based upon them.
This material should not be construed as investment advice or a recommendation or an offer or solicitation to buy or sell securities and does not constitute an offer or solicitation in any jurisdiction where or to any persons to whom it would be unauthorized or unlawful to do so.
Access Subject to Local Restrictions
The Website is intended for the following audiences in each respective country or region: In the U.S., public distribution. In Canada, public distribution. In the UK, professional clients (as defined by the Financial Conduct Authority or MiFID Rules) and qualified investors only and should not be relied upon by any other persons. In the EEA, professional clients, professional investors, qualified clients and qualified investors. For qualified investors in Switzerland, qualified investors as defined in the Swiss Collective Investment Schemes Act of 23 June 2006, as amended. In Singapore, public distribution. In Hong Kong, public distribution. In Japan, Professional Investors only (Professional Investor is defined in Financial Instruments and Exchange Act). In Australia, public distribution. In Brunei, Indonesia, Philippines and Malaysia, Institutional Investors only. In Latin America, institutional investors and financial intermediaries only (not for public distribution). In Mexico, institutional and qualified investors only (not for public distribution).
This Contents are not intended for, or directed to, persons in any countries or jurisdictions that are not enumerated above, or to an audience other than as specified above.
This Website has not been, and will not be submitted to become, approved/verified by, or registered with, any relevant government authorities under the local laws. This Website is not intended for and should not be accessed by persons located or resident in any jurisdiction where (by reason of that person’s nationality, domicile, residence or otherwise) the publication or availability of this Website is prohibited or contrary to local law or regulation or would subject any BlackRock entity to any registration or licensing requirements in such jurisdiction.
It is your responsibility to be aware of, to obtain all relevant regulatory approvals, licenses, verifications and/or registrations under, and to observe all applicable laws and regulations of any relevant jurisdiction in connection with your access. If you are unsure about the meaning of any of the information provided, please consult your financial or other professional adviser.
No information on this Website constitutes business, financial, investment, trading, tax, legal, regulatory, accounting or any other advice. If you are unsure about the meaning of any information provided, please consult your financial or other professional adviser.
BlackRock shall have no liability for any loss or damage arising in connection with this Website or out of the use, inability to use or reliance on the Contents by any person, including without limitation, any loss of profit or any other damage, direct or consequential, regardless of whether they arise from contractual or tort (including negligence) or whether BlackRock has foreseen such possibility, except where such exclusion or limitation contravenes the applicable law.
You may leave this Website when you access certain links on this Website. BlackRock has not examined any of these websites and does not assume any responsibility for the contents of such websites nor the services, products or items offered through such websites.
Intellectual Property Rights
Copyright, trademark and other forms of proprietary rights protect the Contents of this Website. All Contents are owned or controlled by BlackRock or the party credited as the provider of the Content. Except as expressly provided herein, nothing in this Website should be considered as granting any licence or right under any copyright, patent or trademark or other intellectual property rights of BlackRock or any third party.
This Website is for your personal use. As a user, you must not sell, copy, publish, distribute, transfer, modify, display, reproduce, and/or create any derivative works from the information or software on this Website. You must not redeliver any of the pages, text, images, or content of this Website using « framing » or similar technology. Systematic retrieval of content from this Website to create or compile, directly or indirectly, a collection, compilation, database or directory (whether through robots, spiders, automatic devices or manual processes) or creating links to this Website is strictly prohibited. You acknowledge that you have no right to use the content of this Website in any other manner.
Investment involves risks. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase.