Funding concerns deepen for Asia private equity deals

jueves 25 de septiembre de 2008 11:54 CEST

By Michael Flaherty

HONG KONG, Sept 25 (Reuters) - Private equity firms, already hit hard by the credit crunch's impact on lenders, face an even tighter lending market for pending deals after the recent Wall Street shake-up.

Even in Asia, a hot economic region thought to be ripe for private equity deals, the Wall Street upheaval is having an effect.

Tighter lending conditions could either delay, re-price, or scupper any given auction in the $500 million to the $1 billion or above range that involves private equity suitors, Asian industry sources say.

The major blow to private equity borrowers came in the last two weeks when the list of major Wall Street lenders changed dramatically. Lehman Brothers filed for bankruptcy, Bank of America (BAC.N: Cotización) bought Merrill Lynch MER.N, and both Morgan Stanley (MS.N: Cotización) and Goldman Sachs (GS.N: Cotización) became bank holding companies.

Rob Morrison, the chairman of research and investment firm CLSA, said that with more write-downs expected from U.S. and European banks, it's possible they will need to raise hundreds of billions more to shore up their balance sheets.

"If Western banks have to raise that sort of capital, they're not out there lending," Morrison told Reuters on Thursday on the sidelines of the Super Return conference.

Bain Capital Hong Kong-based managing director Jonathan Zhu also believes the current market turmoil could impact the financing and valuation of pending private equity deals.

"My suspicion is that it will. Exactly how, I'm not sure."   Continuación...