Private Equity in the Covid-19 Crisis

Private equity investment trusts invest in unquoted companies not yet listed on the stock market. How have they fared in the sell-off? 

Annalisa Esposito 27 May, 2020 | 10:44AM

stock market

While the impact of the coronavirus pandemic on global stock markets is clear to see, it's harder to discern its effect on private equity markets. Investors in unlisted companies don't have the option to buys and sell shares at a moment's notice as they do with businesses listed on the stock market, but that doesn't mean these firms can't see their valuations plunge during a crisis. 

Private equity is typically viewed as a risky area of investment. Lack of liquidity is a prime concern as it can take a long time to offload an investment, and fledgling businesses are often prone to failure. Concerns around the risk of the sector were raised last year during the high-profile collapse of the Woodford Patient Capital Trust, which was taken over and renamed by Schroders after embattled investor Neil Woodford closed his eponymous fund firm. 

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About Author

Annalisa Esposito  is a data journalist for Morningstar.co.uk

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