Market Talk – July 26, 2024
ASIA: The major Asian stock markets had a mixed day today: NIKKEI 225 decreased 202.10 points or -0.53% to 37,667.41 Shanghai increased 4.16 points or 0.14% to 2,890.90 Hang [...]
The Rising Tone of Private Equity v Public
QUESTION: Dear Martin,
With the U.S. stock market hits all-time highs, some sources say a lot of smart money is pulling out of the stock market and piling into private equity. One of the reasons being increased regulation making many companies choose to avoid the hassle to go public and stay private.
The thing is, very few small investors have access to private equity. Could the remainder of the Private Wave develop in private equity rather than in stocks?
Thanks for all the advise,
ANSWER: There is a major thrust toward private equity. We have been getting serious offers to come in now asking to hold off on going public. The amount of money in cash looking to go someplace is really staggering to put it mildly. If it were just a question of money, yes it would be tempting. But personally it would require a good fit – not simply money.
With all the buy-backs over the years, there is also a growing shortage of stock. This is one reason why the market has a lot more to go on the upside broader-term, with the near-term correction put aside.
There is no question that we suffer from serious over-regulation and if we were to go public it will be in Asia – not the USA. From a personal perspective, I see where you are coming from. Even the Hollywood movie seems to be a vehicle that is best to open up to investors to finance and many people want to join in for the profits and tax-credits.
Things are changing, indeed. Private equity is rising. Even a friend just sold his small business to a public company who sought to raise funds for the purchase and they were shocked to receive 3 times what they sought to raise in offers. It clearly seems that those who are first get in.
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