Private equity flips its economic defibrillator.
In March 2020, the heartbeat of the global economy stopped almost in unison. COVID-19 triggered a kind of cardiac arrest. Suddenly, children learned at home. Planes stayed grounded. Oil prices collapsed. TikTok became the new office. The human cost was heavy, and a spectre of death brought sadness and hardship to many.
A two-speed economy soon followed. Hotels, restaurants and clothing shops closed. Their staff moved onto government pay schemes with lower, uncertain wages. Hospitals built up backlogs. Funeral services were pushed beyond capacity. Meanwhile, the corporate world shifted to working from home. Zoom calls became the new normal. As a result, both sides moved online, because customer demand changed in every sector.
Is this 2008 again?
Will COVID-19 resemble 2008? Jon Kirk thinks not. He is a Partner at Redburn, a firm that has supplied paid research to private equity houses for years. Its minority stakeholder is the investment bank Rothschild & Co.
The current situation is very different from the 2008 Global Financial Crisis. The financial system is far stronger today. This time it acts as a source of stability, rather than the heart of the problem. Policymakers also hold a much broader set of tools for economic shocks. And they were able to deploy them far more quickly.
Jon Kirk, Partner at Redburn
For private equity, the defibrillator is ready once more.
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