This week in France, two significant events took place: the royal visit of Prince Charles and Camilla, Duchess of Cornwall, and the private-equity industry's gathering at the IPEM conference in Paris. The royal visit aimed to mend the strained relations caused by Brexit and rekindle the historic ties between the two countries. French President Emmanuel Macron met with UK Labour leader Keir Starmer, indicating a search for allies in the increasingly polarized European political landscape.
Amidst the grandeur of Versailles and lavish banquets, the private-equity industry convened at the IPEM conference. While luminaries like Blackstone Group's Stephen Schwarzman praised France for its handling of Brexit, the prevailing sentiment was one of caution. The industry has thrived over the past decade, but with rising interest rates and a slowing economy, there is a growing feeling that the party may be coming to an end. Antoine Flamarion of Tikehau Capital warned that the road ahead would be "super bumpy."
While certain sectors of the private-equity industry, such as private credit and infrastructure, continue to perform well, the overall assessment is gloomy. Fundraising has become arduous, as investors seek better returns elsewhere without taking on significant risks. Valuations have dropped, and IPOs have become scarce, making it more difficult to exit investments. A veteran venture capital investor noted that this is the toughest fundraising environment since 2002.
Dominique Senequier of Ardian, who founded her firm a decade ago, shared sobering insights about the future. She predicted that not all private-equity funds would survive, fueling speculation of consolidation within the industry. It is also worrisome that some assets may struggle to find buyers in the current climate, considering the substantial debt burden on many buyout targets.
While there is still demand for private equity, particularly in sectors like telecoms and energy, the overall sentiment at the conference was that the industry might be approaching its end. This royal visit of the private-equity world felt more like the conclusion of an era than a celebration of its continued success.