PE without free money

With rates staying higher for longer financial engineering is no longer the name of the game. KKR, EQT, Barclays and Deutsche Bank discuss how PE managers can deliver value in the current environment.

It looks like interest rates are not returning to their near zero levels where they sat for more than a decade pre-2022. During that era, private equity (PE) firms could generate outsized returns by piling on leverage. But as the cost of capital rises, that strategy is becoming far more difficult to implement. So how do PE strategies deliver true value outside of the era of ‘free money’, and will the performance be enough to justify investing in new evergreen vehicles?