Blackstone’s Asia Pacific wealth boss Ed Huang said higher rates will drive increasing dispersion in private equity returns as performance will rely on managers’ ability to turn businesses around rather than cheap leverage.
‘In the low rates era, a lot of returns were driven by multiple expansion and leverage,’ Huang told Citywire Asia in an interview. ‘Today, I think returns are going to be driven more by active management and creating value in a business, and those that have the capabilities to do this will still do well.’
Talk of the end of a golden era for private equity has not deterred investors from continuing to pile into private markets, particularly after last year’s rate rises ended more than a decade of cheap money lifting asset prices.