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Private equity funds reinvent themselves (again)

Under pressure from investors to put money to work, private equity firms are reconsidering the structure of their investment strategies.

Richard Addlestone, Walkers

"Now private equity is looking to reinvent itself again in several ways, including trying to invest in financial companies"

Richard Addlestone, Walkers

"Sovereign wealth funds and pension funds are putting pressure on private equity firms to deploy capital, but funds have found it hard to find places to park money that will produce returns," says Richard Addlestone, a partner at law firm Walkers. One sector increasingly of interest is banks and other financial institutions, but TPG’s experience with its investment in Washington Mutual has made some funds nervous. TPG injected $1.3 billion into WaMu, which might all have been lost following the seizure of the regional bank by the US government. Addlestone says some confidence was restored after the US bail-out package but private equity firms will most likely structure investments differently in order to take advantage of the opportunities available in financials. "The private equity industry is very adaptable," he says. "We saw that when the credit crisis hit and cheap debt ended. Funds adapted – they went back to their roots and tried to maximize value out of their existing companies.

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