NORDIC - The winner takes it all

MacKay went on to elaborate that the losers will be those that wait for conventional lenders to turn the tap on again, while the winners will be GPs with a focus on growth, and buyout funds utilising alternative debt solutions. Listing the various financing methods available, he highlighted the use of bonds in North America, where bank financing is near impossible; the return of mezzanine and increased use of debt roll-over in Western Europe; financing from HNWs and loans from pension funds in Eastern Europe; and debt-for-debt swap solutions and sovereign wealth funds in Asia.

With respect to deals, MacKay observed four types of deals that are currently being executed in the global private equity space: discounted secondaries, growth capital investments, infrastructure investments, and a "staggering amount" of bolt-ons. EQT's Paul Schrotti concurred in a later panel, stating that he spends as much as 70-80% of his time working on potential add-on acquisitions for existing portfolio companies, rather than new investments.

Statistics from key note speaker professor Fredrik Strömberg, from the Institute for Financial Research at the Stockholm School of Economics, showed that prices during the boom seemed to have been driven largely by the availability of cheap debt. Yet, despite the spiralling valuations and the challenges many PE funds face as a result of the credit boom, Strömberg remained positive about the PE model, concluding that private equity ownership increases corporate efficiency and leads to better capital allocations and economic growth.

The key to survival will therefore be to manage the existing portfolio whilst retaining the ability to act on the attractive deal opportunties that will inevitably arise as a result of the current market conditions. In the words of Alan MacKay: "do not miss this opportunity."

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