THE ROAD AHEAD: PREDICTIONS

“Private equity allocations will grow, new entrants will come into the market and public vehicles will continue to develop and be created that allow greater choices for investors looking to invest in the asset class. We believe that 2008 will be a year in which private equity climbs that “wall of worry” that public investors talk about, in which investments and results will surprise everyone predicting the end of markets, mankind and private equity, although perhaps not in that order.”

Mario Giannini, chief executive, Hamilton Lane, Bala Cynwyd, Philadelphia

“In 2008 we will see more leverage going into transactions with local money at reasonable rates. We will use leverage selectively to enhance returns and to allow us to compensate for the increase in valuations as competition heats up. Globalisation has been a huge boon for the region, but it is vulnerable now to any slowdown in demand for commodities. Any borrowing will be constrained by the business's ability to pay down debt from cash flow.”

Antonio Bonchristiano, managing partner, GP Investments, Sao Paolo

“2008 will be a year of continued progress in technology venture capital. With increased funds available, but not oversupplied, good deals will be financed at sensible prices. A large number of later-stage IT companies, still in private hands, show revenue progress and good market positions. These are a great opportunity for growth and expansion investors. Sectors that remain strong are wireless (both infrastructure and applications), broadband (particularly anything involving video over the internet), and cleantech (evolving into a sector larger than any IT sub-sectors) – all long-term innovation waves.”

Anne Glover, chief executive, Amadeus Capital Partners, Cambridge, England

“Public equity markets in most major Asian economies will trade at substantially lower levels at the end of 2008 than the levels they were at in September 2007. This will be reflected in the pace of deal completions and exits for private equity. Some of the larger buyouts completed in Asia in the last 18 months that were won at auctions at high multiples and which pushed the limits on financing leverage, will begin to exhibit cracks in their façades. They will need to be restructured. The spectacular private equity returns achieved in China and India in the last three years will not be repeated again in the next three years – they will be substantially lower.”

KY Tang, chairman and managing partner, Affinity Equity Partners, Hong Kong

“Large buyouts done in 2005, 2006 and 2007 will remain on the books for longer than normal, as GPs try to improve the underlying businesses and wait for market pricing to reach the levels in which those deals were done. The result will be lower internal rates of return, but not significant write-downs. Small and mid-market buyouts pricing will stay largely as it has been, although there will be some competition from large buyout firms who move down-market in order to get their money to work.”

Brooks Zug, senior managing director, HarbourVest Partners, Boston