Investment funds are looking at future bargains deals
12 June 2020
After a period of astonishment, it appears that investment funds prudently retake their activities.
During the first period of the lockdown following COVID-19, the investment funds’ first concern was to safeguard their existing portfolio. During this period, they have primarily focused on demonstrating their added value by providing expert support with a focus on ‘damage control’.
Whereas the number of ‘deal closings’ is typically significant before the summer period, a distinct decrease can be observed due to COVID-19. While the number of transaction closings which have been permanently suspended appears to be rather limited, it can be observed that numerous transactions have been delayed. The main reason of postponing ongoing deals is of course the uncertainty of the future performance of the targeted investments. In addition, the willingness to cash-out significant amounts decreased. Last but not least, the absence of face-to-face human interaction appeared to be another reason for to delay as the human relationship is considered as key in closing a transaction.
The ongoing crisis could nevertheless be an opportunity for investors as it will certainly open capital entry. Hence, investment funds are prudently retaking their activities looking for opportunities. It is expected that, going forward, there will be a focus on enterprises in need of external financing in order to relaunch their activities and to strengthen their equity to endure a possible next downturn.