NEW YORK, Dec 7 (Reuters) – New York buyout firm Apollo’s co-founder Leon Black has predicted that traditional private equity is dead, and will remain so for a couple of years, the New York Times quoted him saying on Sunday.
The financial crisis brought to an end lending for the leveraged buyout deals that private equity firms relied on.
Apollo did a number of deals during the private equity boom and has investments in companies including gaming firm Harrah’s Entertainment Inc, Claire’s Stores and real estate company Realogy.
“Traditional private equity is dead and has been for a year,” the paper reported Black saying. “It will probably remain so for a couple of years.”
The paper also cited him as saying his firm is poised to take advantage of the turbulence.
Apollo has just raised $20 billion in new money that he says will go, in part, toward buying cheap debt, it said.
“We’ve totally turned into a bond house,” the paper quoted him as saying.
Black says the big money over the next few years will be made in vast restructurings — the financial, operational and structural changes that companies will need to make if they hope to survive the economic malaise — the paper said.
The economic crisis has caused problems for a number of Apollo’s portfolio companies, such as Linens ‘n Things, which filed for bankruptcy protection and casino company Harrah’s Entertainment Inc, which has been struggling with its debt load. (Reporting by Megan Davies)