Private equity firms suffer as deals fall in downturn

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The Independent Online

Private equity firms sold fewer European businesses last year, reflecting the "volatile" economic climate and the unwillingness of banks to provide debt financing for deals, according to the accountancy firm Ernst & Young.

There was a 28 per cent slump in the number of portfolio companies that private equity firms exited.

Sachin Date, Ernst & Young's private equity leader for Middle East, India and Africa, said: "With Europe and many other regions showing little or no GDP growth over such a prolonged period, the private equity portfolio has inevitably been affected."

While the amount of debt that banks are willing to lend to potential buyers remains significantly below pre-credit crisis levels in 2007, the accountancy firm said that European businesses have also struggled to grow profits during the economic downturn to wet the appetites of investors.