By Miriam Gottfried

Publicly traded private-equity firms have been among the losers in the tariff-driven market rout.

Shares of Blackstone, Apollo Global Management and KKR were down sharply early Friday, after falling 10%, 13% and 15%, respectively, on Thursday.

Private-equity firms generally represent a leveraged bet on equities. They own companies in sectors across a wide swath of the economy that they used significant amounts of debt to buy. So when markets tumble, shares of private-equity firms tend to fall further.

Shareholders are also worried that a downturn will exacerbate the problem of firms struggling to offload companies and return money to investors because they don't want to accept lower valuations. Firms are sitting on 29,000 unsold companies worth $3.6 trillion, many of which were bought at the peak of the market when interest rates were lower, according to Bain & Co. The dynamic has depressed fundraising.

On the flip side, if global economies are slowing down, or heading into a recession, there could be a buying opportunity for buyout firms.

"History shows clearly that those are the periods when private markets, particularly private equity, outperform by the greatest amount," said Mario Giannini, executive co-chairman of private markets investment and advisory firm Hamilton Lane.

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(END) Dow Jones Newswires

April 04, 2025 09:44 ET (13:44 GMT)

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