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Updated · Bloomberg · Jun 10Apollo's Kleinman Says Private Equity Must Cut Valuations as Borrowing Costs Normalize
2 articles · Updated · Bloomberg · Jun 10Summary
- Scott Kleinman said private equity firms now need to capitulate on portfolio valuations after the easy-money era left many assets priced too high.
- Higher borrowing costs are driving that reset, he said, arguing the industry "lost its way a little bit" when cheap debt supported richer deal prices.
- Capital for exits is still available, but buyers are offering lower prices, leaving firms that paid peak valuations effectively stuck.
- The warning points to a broader reckoning for private equity as financing conditions stay tighter and delayed exits pressure returns.
Insights
As easy money vanishes, can private equity’s operational skills alone justify its premium returns? With 32,000 companies stuck in aging portfolios, what is the endgame for these 'zombie' investments? Is the opaque $2 trillion private credit market the next ticking time bomb for global finance?