Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Businesses backed by private equity face heightened default risks, warns Bank of England

by October 2, 2024
October 2, 2024
Businesses backed by private equity face heightened default risks, warns Bank of England

Businesses owned or supported by private equity (PE) are at a significantly higher risk of default compared to other large corporates, the Bank of England has cautioned.

According to new research, these companies are more vulnerable to financial instability, particularly when compared to firms that primarily rely on traditional lenders like banks.

The research highlighted that over two million UK workers are employed by businesses backed by private equity funds, which account for 15% of the country’s corporate debt. PE-backed companies are also more likely to face challenges meeting debt obligations due to lower earnings and returns relative to their interest expenses.

In 2023, more than one in five PE-backed companies were at risk of default, an improvement from one in four in 2022. However, this is still significantly higher than the default risk among listed companies (11%) and other large businesses (14%).

The Bank of England’s researchers found that private equity-backed firms are over twice as likely to rely on riskier forms of debt, such as private credit and leveraged syndicated loans, leaving them more exposed to market downturns and cash flow issues. The reliance on debt, combined with the higher interest rate environment, has increased refinancing risks for these businesses.

The Bank emphasised that improved transparency within the private equity sector would help mitigate some of these vulnerabilities. It noted that better clarity around valuation practices and leverage levels could reduce risks across the sector.

Despite these concerns, Michael Moore, chief executive of the British Private Equity & Venture Capital Association, defended the sector, noting that private equity plays a crucial role in funding UK businesses and supporting companies during economic stress. He pointed to the industry’s positive impact on competition in financial services and its ability to improve underperforming companies.

The Bank’s data revealed that a third of all PE-backed jobs are located in London, with significant concentrations in Yorkshire and the Humber, the East of England, and the South East. Sectors most often targeted by PE firms include communications, finance, insurance, and professional services.

Read more:
Businesses backed by private equity face heightened default risks, warns Bank of England

0
FacebookTwitterGoogle +Pinterest
previous post
Business Matters’ Secrets of Success: Brendan Noud
next post
Wet weather drives UK retailers to slash prices in September

You may also like

Natwest on track to exceed investment in women...

May 10, 2024

Concrete financial protection in just a few taps

September 13, 2022

Trump’s Truth Social Faces Investor Exodus as $58M...

April 2, 2024

No 10 food summit ‘no more than a...

May 16, 2023

Harland & Wolff bailout sparks concerns over future...

August 2, 2024

Myenergi calls for local businesses to celebrate what...

December 10, 2024

Americans increasingly wary of Trump’s tariff push as...

March 17, 2025

How to Make ChatGPT Undetectable? (5 Proven Ways)

October 30, 2024

Ethnicity and disability pay gap reporting: What employers...

March 26, 2025

Why SMEs won’t ditch Green intentions despite ongoing...

February 23, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Friday Feature: Helena Homeschool Enrichment Co-op

      August 22, 2025
    • Justice Jackson accuses Supreme Court of ensuring Trump ‘always wins’ in scathing dissent

      August 22, 2025
    • John Bolton blasted by Trump ally Roger Stone, who faced Biden FBI raid: ‘Karma is a b—-‘

      August 22, 2025
    • Trump–Bolton feud back in focus after FBI raid: ‘Never had a clue … what a dope!’

      August 22, 2025
    • James Comer praises Kash Patel for ‘holding deep state accountable’ as FBI raids John Bolton’s home

      August 22, 2025
    • From Tariff Shock to Mild Sting: How the EU Deal Could Affect Drug Prices for Patients

      August 22, 2025

    Categories

    • Business (8,855)
    • Investing (2,234)
    • Politics (16,463)
    • Stocks (3,228)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved