The bear, the bull and return on investment: PE’s climb to the top

What a difference a decade makes. It’s 10 years since the global financial crisis developed into a fully-fledged crash in 2008 with the collapse of Bear Stearns, Lehman Brothers, Fannie Mae and Freddie Mac, liquidity freezes and bail-outs on a seismic scale, notably for AIG, Bank of America and Citigroup.

Ten years on and the global economy seems back on track with positive noises emanating from Wall Street, the City of London and other major financial hubs. While it is true that market volatility is slowly creeping back and that geo-political uncertainties have become the new zeitgeist, so far the markets have retained confidence in business. None more so than private equity.

Which raises two intriguing questions. How has private equity climbed back from the doldrums of 2008 to the high valuations and oversubscribed funds of 2018? And how has the industry managed to do this amid the introduction of a punishing post-crisis regulatory regime?

Many of the answers can be found in a small island in the Caribbean. The way the Cayman Islands has evolved in the postcrisis environment typifies how innovation and adaptability have become the bedrocks of private equity’s revival since the crash.

This article was originally published in Private Equity International.


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