The days of the $20bn (£13bn) private equity deal are dead, according to bosses at private equity giants Blackstone and Apollo.
Speaking at The British Private Equity and Venture Capital Association Summit 2011 in London yesterday Sanjay Patel,the head of international private equity at Apollo Management International, said: "The $20bn deals days are gone. Fund sizes are coming down. We are back to 2002 levels. The 2005-2008 type of deals won't be repeated and it wasn't particularly healthy."
Lionel Assant, senior managing director in private equity at Blackstone Group, said: "Returns coming out of financial engineering – these days are over. Geographical expansion and knowing the operational business you invest in is key. You can no longer afford to not know the business sector you invest in."
But the boom years of 2005-2008 were part of a cycle of boom and bust and private equity bosses agree the cycle will continue.
Marco de Benedetti, the managing director and co-head of European buyouts at Carlyle Group, said: "The cycles are getting shorter but we will see big buyouts again. We just don't know when. We will probably see another $10bn deal at some point."
But the current volatility in the markets has put most deals on hold.
Mr Assant explained: "At the beginning of this year we were offered twice the amount of leverage we actually took to finance two deals. But right now we can't finance anything. It is so volatile. But we have seen excellent returns in some cases on unleveraged deals."Reuse content