Tech disruption hits buyout business models: Reuters
Underwriting banks and leveraged loan investors are struggling to analyse the impact of technological disruption on the business models underpinning private equity buyouts, as they try to dodge bullets by avoiding lending to companies that could be rendered obsolete by the ‘Amazon effect’, Reuters reported. KKR-owned U.S. retail giant Toys ‘R’ Us sent shock-waves through the market when it filed for Chapter 11 bankruptcy protection in September, citing the “unrelenting competition from e-commerce” as key to its predicament. “Technology is undoubtedly a threat to traditional business models: this is definitely a topic discussed in every credit committee. The first question everyone asks is: ’What’s Amazon doing?’” said Simona Maellare, global co-head of financial sponsors coverage at UBS.
