What next for private equity?

Private equity is enjoying a boom. Private funds have raised billions of dollars over the past decade or so, partly because many of the most exciting companies in the world are listing later in their lifecycle.

It means that more value creation is taking place before companies list publicly. For example, Amazon had its initial public offering (IPO) with a stock market valuation of USD $400 million (£322.60 million). Facebook was one of the most expensive listings in the history of the financial markets with an IPO in 2012 valuing the social media giant at $104 billion (£80.62). Uber was the biggest valuation in 2019 at $82 billion (£66 billion).

"That is an extremely significant series of numbers," says Edward Mathias, Senior Adviser and Partner at The Carlyle Group, one of the biggest investment firms in the world.

"Private companies are generating tremendous interest in cash flows. They are also creating new models for profits and expenses. Amazon lost about $3.3 billion (£2.68 billion) in the first 10 years of its existence. Uber lost $3 billion (£2.43 billion) last year. Private equity is a business which has changed dramatically."