MSN MoneyCentral – Leading figures in the European private equity industry are warning that deals are being financed too aggressively and that relaxed attitudes in the markets are tempting borrowersto take on too much debt.
Sir Ronald Cohen, founder of Apax Partners, a buy-out group, said the “permissive environment” was leading to debt levels of up to eight times projected earnings, while Jon Moulton, head of private-equity group Alchemy, has warned of a looming correction.
Rising debt levels have been fuelled by unprecedented demand for risky loans and bonds from hedge funds and other investors – an appetite that shows little sign of waning in spite of recent signs of risk aversion in other markets. Experts fear some borrowers may be taking on too much debt.
