In the midst of a sharp economic downturn due to the spread of the coronavirus and the subsequent temporary shutdown of many sectors of the American economy, private equity firms are looking to make massive investments in the industries that are the hardest hit by the economic freefall, as reported by CNBC.
A handful of private equity firms, including Blackstone, Carlyle, and KKR, have a historic $1.5 trillion in cash on hand, and investment bankers from the companies, speaking under conditions of anonymity, say that such companies are prepared to make investments in many negatively-impacted companies.
One such anonymous banker said that “they have been waiting for this type of dislocation. I don’t think they wanted something quite this bad, but they did want a pullback in valuation.”
Such equity firms have been mostly holding onto their cash due to the stock market rising consistently over the last three years, with the strong economy under President Trump making it more difficult to invest. Now, with the sudden uprooting of most of the economy, firms are looking to make investments, if not stage outright takeovers, in such industries as travel, entertainment, and energy.
Many companies are holding off on any such deals with private equity firms as Congress works to pass a massive $2 trillion stimulus bill, which could provide the kind of financial relief necessary to avoid selling to such firms.