Tom Treanor AVI: Private equity and venture capital discounts

New deals need financing

In the wake of the 2008 Global Financial Crisis, lots of companies in the Private Equity sector experienced balance sheet issues resulting in them trading on very wide discounts to net asset value

The diversified fund-of-funds listed on the London market are good proxies for the broader PE market. Going into mid to late 2021, those funds were trading at between 15% to 20% discounts to NAV and, if you look at them today, they are trading at discounts in excess of 40%. Some might say that is the market telling us valuations are stale and they will come down to meet share prices, which would mean it is not a real discount. Although private valuations do lag public markets, they lagged on the way up, too. Private equity trust discounts ease most among alternatives in H1 Pr...