Private equity and financial stability

David Gregory ()
Additional contact information
David Gregory: Bank of England

Bank of England Quarterly Bulletin, 2013, vol. 53, issue 1, 38-47

Abstract: In the mid-2000s, there was a dramatic increase in acquisitions of UK companies by private equity funds. The leverage on these buyouts, especially the larger ones, was high. The resulting increase in indebtedness makes those companies more susceptible to default, exposing their lenders to potential losses. This risk is compounded by the need for companies to refinance a cluster of buyout debt maturing over the next few years in an environment of much tighter credit conditions. From a macroprudential policy perspective it will be important to monitor the use of debt in acquisitions in future episodes of exuberance. But there is also a potential role for private equity to play in promoting recovery in a downswing, in particular at the current juncture, by restructuring companies in difficulty.

Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.bankofengland.co.uk/-/media/boe/files/ ... 13EC9D173127E93DDAAA Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:boe:qbullt:0096

Access Statistics for this article

Bank of England Quarterly Bulletin is currently edited by Lindsey Fowler

More articles in Bank of England Quarterly Bulletin from Bank of England Publications Group Bank of England Threadneedle Street London EC2R 8AH. Contact information at EDIRC.
Bibliographic data for series maintained by Publications Group ().