Jeremy Warner: Private equity sees land of opportunity

Outlook: Thought you had heard the last of the private equity boys? Think again. The death of leverage hasn't dispirited them at all. With the credit markets closed and even major, well-run companies with market-leading positions struggling to finance themselves, private equity senses a veritable lorry-load of opportunity.

In a world starved of capital, the big private equity funds are in the happy position of having oodles of the stuff sitting there on deposit or in US Treasuries doing nothing.

As others forceably deleverage, private equity has the opportunity to step into the breach and take stakes at knockdown prices or otherwise refinance companies that lenders are deserting. Nor are they the only ones hoping to make hay out of the current distress. Goldman Sachs recently launched a $10.5bn (£6.8bn) fund, GS Loan Partners, to buy up corporate debt, some of which is trading at levels which seem to discount a worse outcome to the present downturn than the Great Depression.

This is not bottom fishing, Goldman is keen to stress. When you can buy senior debt in Boots on a 20 per cent yield, that's got to be good value, even in the event of a capital reconstruction. In every financial meltdown, there are a myriad of money-making opportunities. If you've got cash in the bank, rather than owing it, you are sitting pretty.