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Liquidity crunch on PE

The banking sector distress has been contained by the #federalreserve and the #fhlb, but the banks appetite for new lending has decreased significantly. As you can see in the chart below, the syndicated lending for corporate buyouts, the money General Partners need to fix the companies they take private on their Private Equiry Funds, has decreased 64% on an annualized basis from last year. That means less transactions will happen this year, simply because of lack of funding. Additionally, #buyout funds have $2.8Tn in unrealized assets they haven’t been able to sell through #ipo, #spac or to another fund. And That means less liquidty for #limitedpartners which they are supposed to commit, in part or in full that liquidity to new PE funds. Dry powder is still high, waiting for valuations to adjust, but some of that powder is trapped in prior funds waiting to be released.

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Source: Bain Capital.

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