Page 118 - OBW Winter Ed 2018
P. 118
PORTFOLIO
New Kids
on the Buck!
By: Daniel J. Penseyres
ntil the financial crisis a decade ago, private equity investors
hewed closely to the "buyout" playbook pioneered by
Henry Kravis and George Roberts who founded the global
U investment company KKR in the 1970s. They acquired
companies, then cut costs and loaded them up with huge amounts of debt
while paying the bank back at a low interest rate.
Recently fed by tons of cash from yield-hungry investors, firms historically
devoted to buyouts are now financing deals that banks will not. In fact,
loaning money to companies with the lenders keeping the loans on the
books, known as direct lending, is the latest way private-equity firms are
encroaching on banking’s turf, as they shed many of their riskier businesses,
mainly due to new regulations and a desire to avoid the mistakes of the past.
Photos Courtesy Of: Boston Herald , Forbes, Dreamstime.com
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