Low interest rates: private equity as a must-investment


The same applies to Axel Springer: With private equity, a conversion is easier than a listed company.
Picture: dpa

Low interest rates are forcing institutional investors to engage in alternative investments. Not everyone likes to do it. Private equity specialists benefit from this.

IInstitutional investors are always striving to reduce their dependence on the securities markets through alternative forms of investment. 65 percent rely on private equity according to surveys by the industry service Preqin. This is the most commonly chosen form, still short of real estate and well ahead of hedge funds. In addition to diversification, the main motives are the high returns that this asset class promises.

Martin Hock

These, in turn, essentially result from the fact that private equity funds, unlike stock funds, acquire large holdings in companies in order to take control and corporate responsibility. After all, one wants to change a lot of the company in order to be able to sell the investment later profitably. "That's a lot easier than having to submit quarterly results. For some companies, this is an argument for taking private equity investors on board as strategic partners, "says Andreas Hegedusch, private equity director of Bethmann Bank. A stock market listing is therefore rather disadvantageous for private equity funds.

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