A $369 billion investor lays out how the private-equity boom is supercharging a major risk in the stock market

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A lack of liquidity in the stock market would be costly for large private-equity investors.

Several experts have flagged the vast number of debt-fueled deals, and lofty financial projections for companies. According to Mark Machin, CEO of the, private-equity firms are sitting on about $1.7 trillion of uninvested capital — dry powder still waiting to be deployed.

His concern is that any downturn would see investors look to sell their remaining liquid assets, like stocks, and find that those markets aren't as easy to get out as they had assumed. During a future episode of volatility, large investors will be trying to sell the same stocks. The fallout would be two-fold: investors find it difficult to exit large equity positions, and consequently, struggle to raise the cash that funds private companies.

 

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