After two tough years for private equity, Hafiz Lalani sees a “very different market” taking shape this year, and a chance to make deals that could once again earn the kind of outsized returns the industry experienced before a rapid run-up in interest rates dramatically slowed the pace of deal-making.
Private-equity firms that have already overshot the fixed term of their funds, after trying to wait out a down market, are feeling intense pressure to sell assets so they can return cash to investors. The outlook forhas seemingly become more predictable, or at least more stable, and for the last year financing markets have been healthy, with debt available to help pay for deals – though not quite as much as in the heady deal frenzy of 2021.
CPPIB manages a $156-billion private-equity portfolio, and made a number of new investments in its last fiscal year that ended in March – most notably inand technology companies, which were key contributors to the 9.6-per-cent return the fund earned from private equity last year. At the moment, Mr. Lanani sees “a balanced pipeline” of potential acquisitions across the tech, health care, industrial and services sectors.