Private equity eyes coronavirus-hit industries: They’ve been waiting


The coronavirus pandemic is shutting down entire sectors of the economy and putting millions of Americans out of work, but one corner of Wall Street may find opportunity amid the carnage: private equity.

The group, which includes investment giants Blackstone, Carlyle and KKR, has a record $1.5 trillion in cash ready to deploy and has been actively seeking deals across the struggling travel, entertainment and energy industries, according to a half-dozen investment bankers who declined to be identified speaking candidly about potential clients.

“They have been waiting for this type of market dislocation,” the head of mergers at a major Wall Street firm told CNBC in an interview. “I don’t think they wanted something quite this bad, but they did want a pullback in valuation.”

Private equity firms have been stockpiling cash in recent years as rising markets made it harder for them to invest, accumulating a record pile of “dry powder” for deals. The industry typically buys undervalued companies with borrowed money, taking them private to spruce up operations for an eventual sale. The high company valuations that kept them at bay collapsed this month amid widespread business closures and quarantines of some of the world’s largest cities.

But the confluence of forces at play — an oft-maligned section of Wall Street seeking money-making opportunities in an election year and amid an unprecedented global crisis that has caused thousands of deaths — could invite greater scrutiny on…


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