FirstFT: Slowdown in dealmaking leaves private equity with record unsold assets

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Private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3tn, as a sharp slowdown in dealmaking creates a crunch for investors seeking to sell assets. 

The numbers, revealed in Bain & Co’s annual private equity report, show how rapidly the industry has grown over the past decade, as well as the challenges it faces from higher interest rates that have increased financing costs. 

“It may be another two to three years before the money starts to come back [to investors],” the chair of Bain’s private equity practice told the Financial Times. “It’s probably the number one concern in the marketplace right now.” Read the full report and more of the interview with Hugh MacArthur.

Here’s what else I’m keeping tabs on today:

• Biden’s budget: The White House will release the forecast for the president’s fiscal budget for the coming year, including an increase of corporation tax and a tax on billionaires.

• Congress: The US intelligence agencies testify at the Senate intelligence committee annual hearing on worldwide threats to American security.

• IPO news: The Reddit roadshow begins today. The social media company is hoping to sell 15.3mn shares at $31-$34 each for its imminent initial public offering for a valuation of as much as $6.4bn. Here’s the latest.

• China: The annual gathering of the country’s rubber-stamp parliament ends today. The sudden cancellation of a press conference that was to be hosted by Xi Jinping’s number two highlights the growing centralisation of power in the country.

• Israel-Hamas war: The UN Security Council is to meet to discuss sexual violence. Israel’s foreign minister Israel Katz is to attend the meeting and speak to reporters at 2.30pm eastern time as the US and EU prepare to send humanitarian aid to northern Gaza by sea amid a worsening humanitarian crisis.

On Saturday, May 4 in Washington, D.C., join Jake Sullivan, Gucci Westman, Jancis Robinson, Anne Applebaum and many more for our third annual FT Weekend Festival: US edition. As a FirstFT Americas subscriber claim 10% off your pass today using promo code NewslettersxFestival. 

Five more top stories

1. Americans are increasingly happy about the economy but reluctant to give credit to Joe Biden, according to a new poll for the Financial Times. The grim polling news comes just as the president launches his run for re-election with a campaign based in part on the economic boom in the US during his term in office. Here’s more of the results from the latest FT-Michigan Ross poll.

• More on the 2024 election: Billionaire Republican donors Liz Uihlein and her husband Dick will help bankroll Donald Trump’s re-election campaign. The Uihleins had been among the biggest donors to the campaign of Florida governor Ron DeSantis.

• Analysis: Why do US voters not trust Biden on the economy? Claire Jones in Washington looks in more depth at the findings of the latest FT-Michigan Ross poll.

2. The US yesterday airlifted staff from its embassy out of Haiti as violence engulfs the Caribbean country and gangs set government buildings ablaze in the capital Port-au-Prince. Prime Minister Ariel Henry remains in hiding in Puerto Rico while Caricom, the 15-member Caribbean Community, has called an emergency meeting in Jamaica for later today and invited the US, UN and Brazil. Read more on the island’s descent into violence and anarchy.

3. Thomson Reuters has an $8bn war chest to spend on acquisitions and investments in artificial intelligence, its chief executive has told the FT. The media and data group is betting that the technology will transform rather than undermine its business of supplying information to lawyers, accountants and other professionals. Read the full interview with Steve Hasker.

4. Portugal’s centre-right Democratic Alliance scored a narrow win in parliamentary elections yesterday but fell far short of a majority, turning the far-right Chega party into a potential kingmaker. The result marks another important advance for the right in the EU, where conservatives have won elections or joined coalitions in Italy, Greece, Sweden and Finland in the past two years. But it also pitches Portugal into a period of political uncertainty and potential instability.

5. Apple and Tesla are experiencing cracks in their China strategies as domestic rivals gain ground. Falling market share and sales figures reported this month indicate the two groups face rising competition and the whiplash of US-China geopolitical tensions. Both have turned to discounting to try to maintain their appeal.

Today’s big read

Mato Grosso, a state in Brazil larger than France and Germany combined, was historically seen as a backwater. Today it is being transformed by a revolution, not in semiconductors or artificial intelligence, but agriculture. Now one of Brazil’s richest states, it has a flourishing number of millionaires and billionaires keen to supply the surging global demand for food, particularly from China. Looming on the horizon, however, is a threat to Brazil’s booming agri sector: climate change.

We’re also reading . . . 

• Ruchir Sharma: Bitcoin bulls have been proved mostly right about the digital currency’s prospects as a long-term investment. It increasingly looks more like an asset with staying power, argues the chair of Rockefeller International.

• ‘The US is in a much more perilous state than Russia’: The son of a dissident Soviet physicist, Peter Turchin’s models predicted social instability in 2020 with great accuracy. But was it just luck?

• Meeting motormouths: The ability to interrupt the yammering windbags who make work meetings a misery is a sorely underrated skill, says Pilita Clark.

Chart of the day

Sterling is the only major developed world currency to strengthen against the dollar this year. “Suddenly the UK looks more boring compared to other countries — and boring is good,” said Athanasios Vamvakidis, global head of G10 FX strategy at Bank of America. “It means you avoid volatility.” Although the UK sank into recession at the end of last year, investors are more encouraged about the 2024 outlook. Here’s why.

Take a break from the news

Oppenheimer was the big winner at the Oscars last night, winning best picture and six other prizes. Here’s a round-up of the Academy Awards from our man in Hollywood, Christopher Grimes.

Additional contributions from Irwin Cruz and Emily Goldberg