Ten years to invest buy-out houses’ $500bn

Following the onset of the global economic downturn, private equity players have been quiet. With banks cutting off previously attractive debt packages, large deals have all but dried up and funds have typically scaled back to fewer and smaller, all-cash deals.

If this prudent trend continues, Bloomberg reports, it could take a decade for buy-out firms to unload their reserves.

The report said, “Firms led by Blackstone Group and KKR announced $87bn in deals over the last 12 months, according to data compiled by Bloomberg. At that rate, it would take until the middle of 2021 to invest an estimated $503bn in unspent money, assuming they borrow half the purchase price. Firms usually have three to six years to deploy commitments.”

With such an excessive stockpile of cash and with deal making at a low ebb compared to the boom years of 2005 to 2007, firms may ask their investors for more time to put the capital to work, Bloomberg said.

Copyright © 2010 AltAssets