Carlyle Sees a Peak in Private Equity Deal-Making

Jun 15, 2022 | News

Marco De Benedetti, managing director at Carlyle Group, sees a “definite slowdown” in private equity deal-making and says, “I think the peak is behind us.”

In this interview with Bloomberg De Benedetti elaborates on his views on the economy and what role private capital has to play in the coming years.

Firstly, De Benedetti was confronted with the question wheter the economy was past the peak. “Last year was a great year. I think on all dimension people getting out of the pandemic wanted to do things. Economies were firing on all cylinders. And in our industry deal making was at record highs. We’re seeing a definitely slowdown now. I think the peak is behind us and we are seeing a little bit more headwinds as we head into the second half of the year.”

Marco De Benedetti elaborated on what headwinds he saw in the industry: “The economy was so strong. All of those disruption in the supply chain. Clearly they had external factors but it was because demand was so strong. Now we’re having innovations and things are clearly war a few hundred miles from here especially in Europe. We feel the pain and I feel that that consumer spending is going to be under pressure. Wages are not increasing that much. Filling the tank in your car cost more paying the bills. I think we’ll feel the pinch.” 

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When asked about if he saw potential cracks emerging, De Benedetti pointed out: “There are certain other areas which I think much more immune to those things. Think of health care. The fact that the population keeps aging the fact that the mortality rates keep going down that is not something that is going to change. So you’ll see some sectors which probably have less of a stellar growth in the short term over the medium term. So that for example one area the whole energy transition is a big thing. I think it already started before. And what we’re seeing with the Russian guys now only would accelerate in my view the trend there. So there are some trends that in our view will continue to be very strong on the point.”

Moving on to asking if the volatility in the public market will feed into decreased and depressed valuations for private equity  De Benedetti stated the following, “Well clearly the macro environment in general and the public market is an important benchmark. I do believe that we will see an adjustment in valuation in the private market. There is usually a lag between the public market and the private market. In certain sectors it would be big time. I mean you know you’ve seen the more techie exposed where you know the adjustment has been pretty dramatic. It’s something that we expect. And this is what we are pricing in now.”

Source: Bloomberg

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