MIAMI (Reuters) – The co-founder of private equity firm Apollo Management LP, Joshua Harris, said on Tuesday he did not expect the U.S. economy to hit bottom until 2010-2011, with slow growth from there.
“Importantly, we’re not looking at 2013/2014 being any better, or the same level, as 2007,” Harris said during a panel discussion at the Super Return private equity conference in Miami.
Investments “have to work” based on those years being signicantly worse than during boom times, he said.
The global economic crisis has hurt private equity firms’ ability to sell existing businesses and has meant far more work to keep their portfolio companies above water.
The firms also have been hit by the lack of available leverage to do large deals.
Harris said there had been a fundamental structural change in the leveraged corporate credit markets. He sees a return to a more normalized market “18-24 months out” but doesn’t expect a return to the 2005-2008 levels.
“It will be a long time before we see another $30 billion transaction,” he said, referring to the large leveraged buyouts struck during the private equity boom.
New York-based Apollo said in January it had raised $14.8 billion for its latest fund, just shy of a $15 billion target. About 20-25 percent is already invested, mostly in credit.
The firm said at the time that its focus for the next 18 months would be credit-oriented investments, particularly in large senior loans and distressed assets.
Apollo has investments in companies including gaming firm Harrah’s Entertainment Inc, Claire’s Stores and real estate company Realogy.
The economic crisis has caused problems for a number of its portfolio companies, such as Linens ‘n Things, which filed for bankruptcy protection, and casino company Harrah’s, which has been struggling with its debt load.
Apollo also holds bonds of Charter Communications CHTR.O, the fourth-largest U.S. cable operator, which filed for bankruptcy in March.
By Megan Davies
(Editing by Ted Kerr)