Posted 11/25/2023, 6:00:00 AM
Regulators Worry Overinflated Private Equity Valuations Pose Risks to Pensions
- Private equity valuations of portfolio companies are overinflated and not reflecting true worth, posing risks to pensions investing more in the asset class
- The valuation process is opaque and open to manipulation as PE firms "mark their own homework"
- Continuation funds and other tactics are further delaying price discovery and masking problems
- Regulators have concerns about stability risks and lack of transparency in private markets
- Any market correction could have severe consequences for retirement savings if pension fund exposures are high