PE Q&A: EY's Jeff Bunder Discusses Deal Flow, Exits and Fundraising
July 07, 2014
Jeff Bunder, the global private equity leader at EY, took some time to talk to us about several topics in the PE industry, including fundraising, exits, the Volcker Rule and deal flow in the second half of 2014. For more coverage of recent PE activity, be sure to check our newsletter on July 9, when we will be publishing our 3Q U.S. Private Equity Breakdown report.
Q: What will be the main drivers of PE deal flow in the second half of 2014?
A: Accelerating macroeconomic growth is leading to new and interesting opportunities for PE firms, especially in the developed markets, and should lead to increasing activity. Additionally, a robust market for exits is driving an increase in fundraising, sending dry powder on the upswing after several years of successive declines.
Moreover, the lending markets remain accommodative for a wide range of deal types, and structures remain very borrow-friendly. This has been a key enabler of recent activity, and while interest rates are expected to rise in the coming quarters, funding for high-quality deals should continue to remain available.
Emerging markets could see continued near-term volatility as interest rates rise across developed markets. However, the long-term trends—a rising middle class, low PE penetration, a significant financing gap and difficulty in achieving exposure through public market investments—will remain intact, and will continue to play out over the course of the next decade.
Lastly, the need to divest remains pressing for many firms, which will drive continued secondary buyout activity in many markets.