Breakingviews - Buyout barons are finance now, for good and ill

Jonathan Guilford - Reuters - 17/04
Private equity is supposed to be patient when public markets panic. Yet for shareholders in Blackstone , KKR , Apollo Global Management and Carlyle , it’s proving hard not to get swept up. The buyout barons, now self-styled as alternative asset managers, claim to represent a new and in many ways superior answer to traditional financial business models. The stock market, though, hasn’t reflected that idea during the recent tariff-induced turmoil.
NEW YORK, April 17 (Reuters Breakingviews) - Private equity is supposed to be patient when public markets panic. Yet for shareholders in Blackstone (BX.N), opens new tab, KKR (KKR.N), opens new tab, Apollo Global Management (APO.N), opens new tab and Carlyle (CG.O), opens new tab, it’s proving hard not to get swept up. The buyout barons, now self-styled as alternative asset managers, claim to represent a new and in many ways superior answer to traditional financial business models. The stock market, though, hasn’t reflected that idea during the recent tariff-induced turmoil.
Private-capital groups like to argue that they’re relatively insulated from market swings like the one unleashed by U.S. President Donald Trump’s April 2 announcement. Buyout managers, for example, re-mark their asset valuations coolly quarter-by-quarter, ignoring daily gyrations. And their portfolios are tilted towards services-based industries like information technology and healthcare, which should be less sensitive to trade wars. In 2023, some 30% of private equity’s assets sat in IT, according to MSCI. They’re also light on tariff-sensitive consumer and materials businesses – and increasingly invested in long-term, steady, inflation-protected infrastructure assets like toll roads and data centers.
A chart showing the sector breakdown of value in private equity portfolios and the MSCI ACWI FM index
Meanwhile, debt-market dislocations tend to boost the managers’ private-credit arms, which now account for more assets than the traditional buyout divisions of Stephen Schwarzman’s Blackstone, Henry Kravis’ KKR and Marc Rowan’s Apollo. A similar shutdown in liquid financing markets in 2022 turbocharged the alternative debt providers: buyout deals now use direct lenders rather than bank underw...
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