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The private capital industry conforms to its peak and faces a massive challenge in the sale of billions of dollars in assets, according to the Egyptian industrial and multimillion -dollar investor Nassef Sawiris.
Sawiris, who has invested parts of his fortune in funds in multiple purchase companies, said he and others that support private capital funds were frustrated with the lack of distributions in recent years. Companies have struggled to leave investments in the middle of a deceleration after pandemic in the initial agreement and public offers.
“Private capital has seen its best days.
“[Investors] They are so frustrated. They are a topic count [buyout firms]: “Alcomo any return, its port returned any cash in the last five, six years.”
Sawiris touched a particular objective to the use of “continuation funds” to recycle the capital: a tactical Whinby private capital groups, instead of selling an asset to another owner or enumerating it publicly, move the asset to a new fund maintaining control.
“The continuation funds are the biggest scam in history because you say ‘I can’t sell the business, I’m going to stick it again,” said Sawiris.
The continuation vehicles have become increasingly popular in recent years, increasing around 50 percent to reach a record of $ 76 billion last year, according to a report from the Houlihan Lokey investment bank.
The comments arise when Sawiris has supervised the rupture of its chemicals and fertilizers of the Dutch OCI.
In September, the group agreed to its fourth important elimination, bringing gross procedures of its asset sales to $ 11.6 billion agreements that were reached with commercial buyers instead of shopping stores. He has now sold most of his assets, including his global methanol business, fertilizer holdings and a low -carbon ammonia project in Texas.
OCI has used these sales to return effective to shareholders. Including a payment that will be made at the end of this week, it has distributed $ 6.4 billion in the last four years, with an additional payment or up to $ 1 billion after the sale of its methanol business.
Sawiris said the company had “good luck with the moment” of the provisions given the agitation of the market that has interrupted the agreement, the turn against investing in more sustainable assets and a decrease in gas prices.
Sawiris told the FT in an interview last year that OCI could become a cash shell company that makes acquisitions in different industries.
He said he was approaching the purchase of doses of companies with the prosecuted assets.
Many of them were owned by private capital groups that expected an exit, said Sawiris, added that he did not find one of them to be an attractive objective for an agreement.
“A year ago we observed 70 different companies that would have wanted to be a marrow because they were delivered, and obtain a list and all that … all the private capital that cannot leave,” he said. “We said” as, why are we there to solve another person’s problem “?”
Hello, he also criticized the priorities of private capital managers, saying that they were much more focused on raising capital for their investment vehicles than the operational performance of their portfolio companies.
“They are spending 90 percent of their collection of funds over time and 10 percent managing business,” he said. “They attend the meeting meetings, have dinner and there is a reason why they did not execute the plan.”
After decades of expansion, the assets of the private capital industry under management were reduced last year for the first time since the Bain & Co consulting began tracing industry assets in 2005.
Industry assets in June 2024 fell only 2 percent in the year prior to $ 4.7TN, purchase groups have faced greater challenges as market volatility unleashed by US tariffs slowed the negotiation.
Investment groups have faced problems to sell assets after buying a topic in high valuations in recent years, which complicates their fund collection efforts.
Amid the broader challenges facing the private capital industry, Sawiris said that the best positioned groups for success were those that had grown up large enough as financial institutes such as Blackstone to challenge the main loan banks.
“The only types that have a future are the types that found a niche as a competitor of JPMorgan and Bank of America.”
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