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Private equity is on shaky ground — and that’s a warning for stock markets

Privately held assets are highly leveraged and vulnerable, which could ripple across financial markets

Many privately-owned infrastructure and transport businesses, such as Heathrow Airport, are likely to have suffered serious revenue falls this year - storing up trouble for their owners
Many privately-owned infrastructure and transport businesses, such as Heathrow Airport, are likely to have suffered serious revenue falls this year - storing up trouble for their owners Photo: Getty Images

In any major financial disruption, the other shoe takes some time to drop.

For example, since the outbreak of the coronavirus, Australian pension funds have written down the value of private assets, such as infrastructure, property and private equity, by up to 10%. Softbank, essentially a private capital concern, has been forced to adjust carrying values of its investments. Significant adjustments in the values of privately held assets may lie ahead.

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