Private equity has largely remained an area of interest for highly-qualified professionals. Mostly because of the slower but significant returns. Well, not any more. In the past two years, private equity has outperformed public market and investment in the sector is soaring.
Recent growth in the space make it a more lucrative option for PE investors. In the past two years, there has been tremendous cash flow in firms. Speculatively, the investments won’t slow down. “Going forward, we expect PE/ VC investments to grow at may be 15-20 percent in calendar year 2020,” says, VivekSoni, Partner and National Leader, Private Equity Services, EY (India).
Not just India but across the world, PE has been flourishing and moving at a speed incomparable to anytime in the past. Worldwide PE landscape, predominantly in 2019, has been garnering attention from investors.
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In 2019, the average valuation in the U.S. private equity market stood at a record 12.9 times cash flow.
2. In 2019, PE funds had an unprecedented $2 trillion-plus on hand for investments.
3. According to Bain & Capital 2019 private equity report, in the last couple of years’ value of private-equity acquisitions surpassed public valuation.
Capital market is rising as private equity is outperforming investments in public stocks.
1. In 2018, the value of companies purchased by private equity firms exceeded the value of companies going public.
- Cambridge Associates Private Investments Database shows that through 2018 PE funds in the U.S., Europe and Asia-Pacific have outperformed major stock indexes over one, five, ten and twenty years.
- Over the last twenty years,the number of private equity firms have grown to 7,500 from 1,000, while number of public listed companies has gone down from 8,100 to 4,300.
5 In 2019 alone, Crunchbase projects that roughly $294.8 billion was invested in nearly 32,800 deals.
Leading PE firms across the world
According to Crunchbase, following PE firms were most active and had large number of rounds.
Tiger Global Management –54 rounds
Tencent Holdings–53 rounds
AccelPartners –41
Insight Partners — 40
Andressen Horowitz — 36
Sequoia Capital China –33
Goldman Sachs -32
Sequoia Capital India –31
Sequoia Capital –30
Bessemer Venture Partners –29
Deals in private equity have been growing and are expected to soar in the future too. Consequentially, this is a promising time for private equity professionals who want to grow in their career and those who want to start a private equity job.
Skills required for private equity professionals
Professionals at PE firms are expected to be veritable analytical and well-versed in finance. Following skills are mandatory to get the foot in the door and excel in their role. Discounted cash flow, leveraged finance, and financial modelling skills should be top notch. If you’re coming from an investment banking background, these skills are given.
Private equity professionals are involved in a lot of communication and are expected to have good interpersonal and communication skills.
