Private Equity Firms Are Undervalued On Regulation

 

Private equity firms are still undervalued on the fact that proprietary investments are still gradually moving away from investment and corporate banks to private equity firms, private credit and lending firms, according to Wolfteam Ltd.'s projections and estimates.

Private equity firms are less regulated which allows them to invest in nonpublic investments for the long-term via taking proprietary investments positions and thus compounding their returns better than their more strictly regulated competitors investment banks.

Thus via higher risk taking private equity firms achieve higher returns and high market capitalization and higher valuations than their investment bank counterparts. 

Of course, there is the probability that private equity firms' investments are overvalued. Until there is a possible regulatory reset, though, private equity firms are going to be very successful, in Wolfteam Ltd.'s view.