Private equity funds – an overview of the market, trends and opportunities

Iain McMurdo, Partner at Walkers

The size of the market

Private equity funds have been capturing the attention of investors and the press in the past few years for a number of reasons. Their performance has typically outstripped the equity markets and other alternative investment strategies. The deals pulled off by the private equity houses have grabbed headlines all over the world. In many cases, the leverage buyout funds (LBO Funds) have pooled resources in what have become known as ‘club deals’ to acquire multi-billion dollar companies using leverage to fund the bulk of the purchase price. Companies such as Toys R Us, Hertz, Sears, Burger King and Tommy Hilfiger have recently been taken private by the Private Equity LBO funds. Not only have the deal sizes got bigger in recent years but the Funds formed have also got bigger in size. Now it is not uncommon for private equity funds to close on day of launch with $5-10 bn at their disposal.