Private equity does a u-turn

26 Jun 2009, by Adam Lent Guest in Economics

I couldn’t let this pass.  A quote in yesterday’s Guardian from Tim Lebus, a partner at Duke Street private equity firm:

While less leverage may mean huge returns will be harder to come by, the risk will be lower.

Private equity spent all of 2007 defending itself by saying that the high returns it delivered had nothing to do with high levels of leverage (just the result of excellent management skills); and that there was no extra risk associated with high leveraged buyouts.  These comments completely contradict this.