Many analysts claim the relative under performance of the stocks of the largest private equity firms in the world Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. is due to the high levels of interest rates currently in the USA.
Wall Street equity research analysts claim the high interest rates needed to finance the circa 70 % of debt financed leveraged buyouts puts downward pressure on the value and valuations the leading private equity firms Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. are prepared to pay for leveraged buyout acquisitions. That is intrinsically true, of course.
But the huge wave of money available in the global financial system going after currently mainly artificial intelligence, AI technology company investments applies upward pressure on value and valuations. This could create a virtuous deal cycle that could recycle private equity firms 2021 and earlier investments and provide new cash flows for new investments, according to Wolfteam Ltd.'s projections and estimates.
The valuations of the S&P 500 are historically high, but this does not mean they could not go higher.
If the AI boom turns into bust, however, which could affect the whole US stock market, private equity companies could loose large part of their value.
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