Finance & economics | Buttonwood

The private-equity industry has a cash problem

Little wonder its investors are protesting

Illustration of a large balloon, with a hand dropping a small coin into a person's hand
Illustration: Satoshi Kambayashi

How much money are your private-equity investments making? The question is easy to answer for other asset classes, such as bonds or publicly traded stocks. All that is required is the price paid at purchase, the price now and the time that has elapsed between the two. It is less obvious how returns for private-equity investments should be calculated. Capital is earmarked for such investments, but it is only “called” once the investment firm has found a project. There is little information about value once invested. Cash is returned in lump sums at irregular intervals.

Explore more

This article appeared in the Finance & economics section of the print edition under the headline “Show me the money”

From the March 16th 2024 edition

Discover stories from this section and more in the list of contents

Explore the edition

More from Finance & economics

Solar panels installed on the roof of a building at Skardu in Pakistan's Gilgit-Baltistan region.

Cheap solar power is sending electrical grids into a death spiral

Pakistan and South Africa provide a warning for other countries

People walk at Zaryadye park with the Kremlin and St. Basil's Cathedral in the background in Moscow, Russia.

Russian inflation is too high. Does that matter?

In a strong economy, price pressure can endure for a long time


illustration of a house cut in half diagonally, the lower corner being a bill.

Why you should repay your mortgage early

For the first time in decades, the arithmetic suggests settling housing loans


How AI will divide the best from the rest

Optimists hope the technology will be a great equaliser. Instead, it looks likely to widen social divides

The danger of relying on OpenAI’s Deep Research

Economists are in raptures, but they should be careful

Elon Musk is failing to cut American spending

DOGE has so far disrupted everything in government bar the deficit