Mon, Jun 25, 2007 - Page 12 News List

Private equity firms near cyclical high


The private equity business is near a cyclical high and the volume and size of buyouts may fall in coming months, the chairman of Clayton Dubilier & Rice Inc said.

"The level of activity, the character of transactions, the size of the transactions; all of these appear to be at a cyclical high," Joseph Rice said in an interview in Singapore. "We are pretty close to the peak."

Clayton Dubilier, together with Bain Capital LLC and Carlyle Group, bought a supply unit of Home Depot Inc, the world's largest home-improvement retailer, for US$10.3 billion on June 19.

The buyout business is cyclical, and the last dip took place in 2000-2001, said Rice, who spoke at the World Economic Forum conference.

"Since then, it's been a pretty steady rise. That may lead you to conclude that we are getting pretty close to a peak and that some event may cause us to tip over," Rice said.

Buyout firms raised US$210 billion last year, 57 percent more than a year earlier, according to London-based research company Private Equity Intelligence Ltd.

"There will always be inefficiencies, its how you sieve out the opportunities," said Caroline Wee, a partner at Singapore-based Crest Capital Partners in Singapore, an Asian based private equity firm. "But compared with two to three years back, opportunities are getting lesser given the ratio of money out there chasing the number of deals now."

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