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Finance and economics | Going for broke


WALL STREET TITANS ARE BETTING BIG ON INSURERS. WHAT COULD GO WRONG?


HOW PRIVATE-MARKETS GIANTS ARE OVERHAULING THE FINANCIAL SYSTEM

image: George Wylesol
Jan 23rd 2024
Share

Blackstone listed on the New York Stock Exchange during the summer of 2007.
Doing so just before the global financial crisis was hardly auspicious, and come
early 2009 the firm’s shares had lost almost 90% of their value. By the time the
two other members of America’s private-markets troika rang the bell, Wall Street
had been battered. KKR listed on July 15th 2010, the same day Congress passed
the Dodd-Frank Act, overhauling bank regulation. Apollo followed eight months
later. Each firm told investors a similar story: private equity, the business of
buying companies with debt, was their speciality.

But as the economy recovered, private-markets firms flourished—emerging as the
new kings of Wall Street. The biggest put more and more money into credit,
infrastructure and property. By 2022 total assets under management had reached
$12trn. Those at Apollo, Blackstone and KKR have risen from $420bn to $2.2trn
over the past decade. Thanks to the firms’ diversification, their shares rose by
67% on average during 2023, even as higher interest rates caused buy-outs to
grind to a halt. Although private equity has plenty of critics, the model of
raising and investing funds—whether to buy firms or lend to them—seldom worries
regulators. If things go wrong, losses are shouldered by a fund’s institutional
investors and humiliated fund managers struggle to raise money again. There is
little threat to financial stability.

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--------------------------------------------------------------------------------


AUSTRALIAN HOUSES ARE LESS AFFORDABLE THAN THEY HAVE BEEN IN DECADES

In spite of rising borrowing costs, prices have stayed stubbornly resilient

--------------------------------------------------------------------------------

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