Despite the credit crunch and recently volatility in the stock market, private equity can still be a worthwhile investment for pension funds and other investors, says Watson Wyatt.
According to its Private Equity Market Update, if credit conditions continue to deteriorate, there is likely to be an increase in the supply of distressed businesses.
In the short term, top managers may be able to generate considerable returns by purchasing the debt of good-quality, large businesses at attractive prices as banks look to limit their balance sheet exposures.
“The current market reiterates the need for a well-diversified program. The best course remains making investments that take advantage of market inefficiencies,” says Sanjay Mansukhani, a senior Watson Wyatt consultant. “In private equity, this means employing skilled managers whose investment strategies have been shown to succeed.”
For more about this subject, check out our special section, The Rise of Private Equity.
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