City grandees believe the industry faces a reckoning after an ‘extraordinary 40-year run’
Private equity’s “extraordinary 40-year run is finished” as an era of cheap debt is replaced by higher interest rates, City figures have declared.
Guy Hands, the founder of private equity (PE) firm Terra Firma, says the industry is at risk of facing a similar reckoning to the securitisation market, which he described as the “crack cocaine” of money markets in the run-up to the global financial crisis.
Meanwhile, City grandee Archie Norman, a non-executive director at Bridgepoint and chairman of Marks & Spencer, says higher interest rates mean bosses will have to stomach lower returns because debt is “an important part of their [PE firms’] success”.
The Bank of England last month raised interest rates for the 13th consecutive time to 5pc, the highest level since 2008.