Calls for calm over BoE private equity report

John Bakie
15 March 2013

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Private equity professionals should not panic over the latest Bank of England report on the private equity sector, according to the ICAEW.

Yesterday's quarterly bulletin, which contained a report on private equity and financial stability, saw panic headlines in some parts of the press. However, this is overblown, according to Shaun Beaney, manager at ICAEW's Corporate Finance Faculty.

Despite warnings of a "clamp down on buyouts", Beaney says the Bank of England is simply taking a "considered and balanced" approach to potential risks in the market.

While the report does point out potentially challenging issues for the buyout industry, such as the increased risk of failure among leveraged businesses, the report notes that there is no higher default rate among private equity-backed firms.

"The Bank is not quite predicting an imminent private-equity 'financial crisis' or planning a buyout 'clamp down', after all... but it is rightly keeping an even closer eye on things," says Beaney.

The Bank of England's bulletin can be downloaded HERE, while the ICAEW's Private Equity Demystified guide, which tackles many of the issues raised by the central bank, is accessible HERE.