{"id":44238,"date":"2017-08-01T04:18:03","date_gmt":"2017-08-01T02:18:03","guid":{"rendered":"https:\/\/newserver.fyb.de\/produkt\/situation-of-the-private-equity-market-what-does-the-current-situation-on-the-capital-markets-mean-for-the-private-equity-business\/"},"modified":"2017-08-01T04:18:03","modified_gmt":"2017-08-01T02:18:03","slug":"situation-in-the-private-equity-market-what-does-the-current-situation-in-the-capital-markets-mean-for-the-private-equity-business","status":"publish","type":"product","link":"https:\/\/www.fyb.de\/en\/produkt\/situation-in-the-private-equity-market-what-does-the-current-situation-in-the-capital-markets-mean-for-the-private-equity-business\/","title":{"rendered":"Situation of the Private Equity Market \u2014 What does the current situation on the capital markets mean for the private equity business?"},"content":{"rendered":"

Dr. Chris\u00adtian Hollen\u00adberg<\/strong> \u2014 Mana\u00adging Direc\u00adtor Perusa GmbH, Munich<\/p>\n","protected":false},"excerpt":{"rendered":"

The private equity indus\u00adtry can rightly claim to have earned attrac\u00adtive long-term returns in the past, rela\u00adtively inde\u00adpen\u00addent of capi\u00adtal market fluc\u00adtua\u00adtions. Can we expect this to conti\u00adnue in the future, given what is happe\u00adning on all finan\u00adcial markets at the moment?<\/strong><\/p>\n

In the area of clas\u00adsic forms of invest\u00adment such as govern\u00adment bonds, the picture is very clear for inves\u00adtors today. In Europe at least, we now have the pheno\u00adme\u00adnon of \u201cyield-free risk\u201d in all low-risk asset clas\u00adses. Anyone who invests capi\u00adtal at low risk and without extre\u00admely long matu\u00adri\u00adties will no longer get a nomi\u00adnal return worth mentio\u00adning anywhere in return. In any case, no one is talking about a real return on invest\u00adment anymore. In some cases, even the nomi\u00adnal pre-tax yield has been nega\u00adtive, as in the case of some short-dated first-class govern\u00adment bonds, although initial doubts have even been raised about their suppo\u00adsed risk-free nature. An attrac\u00adtive envi\u00adron\u00adment for capi\u00adtal looks different.<\/p>\n

For riskier liquid invest\u00adments such as equi\u00adties and for riskier illi\u00adquid invest\u00adments such as private equity, the picture is less clear to date. This is due to the fact that finan\u00adcial science defi\u00adnes risk as suscep\u00adti\u00adbi\u00adlity to fluc\u00adtua\u00adtion over time, and before a certain period of time has elap\u00adsed, it is ther\u00ade\u00adfore not possi\u00adble to make any meaningful state\u00adment about the rela\u00adti\u00adonship between risk and return on the basis of histo\u00adri\u00adcal data. The brave new world of \u201cyield-free risk\u201d is still too young to truly assess the long-term perfor\u00admance of riskier assets in this envi\u00adron\u00adment. It is unclear whether a posi\u00adtive real return in these markets is anything more than a bubble, as it might be trig\u00adge\u00adred by prevai\u00adling mini-inte\u00adrest rates.<\/p>\n

In the case of private equity invest\u00adments, there is also the fact that any valua\u00adtion or perfor\u00admance figure prior to the occur\u00adrence of a \u201cliqui\u00addity event\u201d or \u201cexit\u201d is highly ques\u00adtionable. These are illi\u00adquid invest\u00adments. Ulti\u00adm\u00adately, howe\u00adver, only the \u201ccash on cash\u201d reali\u00adzed profit counts, not the theo\u00adre\u00adti\u00adcally deri\u00adved valua\u00adtion, on which, after all, no tran\u00adsac\u00adtion is possi\u00adble for the inves\u00adtor. Howe\u00adver, the profits reali\u00adzed today are all from a diffe\u00adrent time, when all capi\u00adtal market data looked quite diffe\u00adrent. Thus, we have no hard data with which to answer our initial question.<\/p>\n","protected":false},"featured_media":41445,"comment_status":"open","ping_status":"closed","template":"","meta":{"wp_typography_post_enhancements_disabled":false},"product_brand":[],"product_cat":[2452,2604,2617],"product_tag":[2356,2359,2361,2368,2375,2383],"class_list":{"0":"post-44238","1":"product","2":"type-product","3":"status-publish","4":"has-post-thumbnail","6":"product_cat-ebook-en","7":"product_cat-fyb-2013-en","8":"product_cat-dr-christian-hollenberg-en","9":"product_tag-hollenberg-en","10":"product_tag-christian-en","11":"product_tag-capital-market-fluctuations","12":"product_tag-government-bonds","13":"product_tag-asset-classes-en","14":"product_tag-actual-yield","15":"pa_sprache-english-3","16":"pa_sprache-german","18":"first","19":"outofstock","20":"taxable","21":"shipping-taxable","22":"purchasable","23":"product-type-variable"},"yoast_head":"\nSituation of the Private Equity Market - What does the current situation on the capital markets mean for the private equity business? - FYB Financial Yearbook<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fyb.de\/en\/produkt\/situation-in-the-private-equity-market-what-does-the-current-situation-in-the-capital-markets-mean-for-the-private-equity-business\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Situation of the Private Equity Market - What does the current situation on the capital markets mean for the private equity business? - FYB Financial Yearbook\" \/>\n<meta property=\"og:description\" content=\"The private equity industry can rightly claim to have earned attractive long-term returns in the past, relatively independent of capital market fluctuations. Can we expect this to continue in the future, given what is happening on all financial markets at the moment? In the area of classic forms of investment such as government bonds, the picture is very clear for investors today. In Europe at least, we now have the phenomenon of "yield-free risk" in all low-risk asset classes. Anyone who invests capital at low risk and without extremely long maturities will no longer get a nominal return worth mentioning anywhere in return. In any case, no one is talking about a real return on investment anymore. In some cases, even the nominal pre-tax yield has been negative, as in the case of some short-dated first-class government bonds, although initial doubts have even been raised about their supposed risk-free nature. An attractive environment for capital looks different. For riskier liquid investments such as equities and for riskier illiquid investments such as private equity, the picture is less clear to date. This is due to the fact that financial science defines risk as susceptibility to fluctuation over time, and before a certain period of time has elapsed, it is therefore not possible to make any meaningful statement about the relationship between risk and return on the basis of historical data. The brave new world of "yield-free risk" is still too young to truly assess the long-term performance of riskier assets in this environment. It is unclear whether a positive real return in these markets is anything more than a bubble, as it might be triggered by prevailing mini-interest rates. In the case of private equity investments, there is also the fact that any valuation or performance figure prior to the occurrence of a "liquidity event" or "exit" is highly questionable. These are illiquid investments. Ultimately, however, only the "cash on cash" realized profit counts, not the theoretically derived valuation, on which, after all, no transaction is possible for the investor. 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