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Coronavirus & CEPRES‘ portfolio modelling and risk-management

The current standstill in global public life will have a strong impact on private markets in the near future.

Portfolio companies and therefore funds in the private equity, private debt, infrastructure, and real estate asset classes will be affected differently.

At CEPRES, we expect a very strong differentiation between different sectors with some even seeing positive effects.

According to CEPRES Market Data analysis, approximately 60-70% of the portfolio companies in the hands of private equity funds are active in traditional, manufacturing and consumer industries and are thus heavily dependent on functioning supply chains. Given the observed disruption to these global supply chains and structural changes in the short to medium term, affected companies will have to cope with efficiency losses, and consequently, lower operating margins. Due to lower purchasing power in all economies, we do not think potential medium-term revenue increases will compensate for these efficiency losses: the changes will, therefore, be at the expense of the companies’ enterprise value growth and investors’ performance.

The current standstill in global public life will have a strong impact on private markets in the near future.

Portfolio companies and therefore funds in the private equity, private debt, infrastructure, and real estate asset classes will be affected differently.

At CEPRES, we expect a very strong differentiation between different sectors with some even seeing positive effects.

According to CEPRES Market Data analysis, approximately 60-70% of the portfolio companies in the hands of private equity funds are active in traditional, manufacturing and consumer industries and are thus heavily dependent on functioning supply chains. Given the observed disruption to these global supply chains and structural changes in the short to medium term, affected companies will have to cope with efficiency losses, and consequently, lower operating margins. Due to lower purchasing power in all economies, we do not think potential medium-term revenue increases will compensate for these efficiency losses: the changes will, therefore, be at the expense of the companies’ enterprise value growth and investors’ performance.

Risk management
Portfolio monitoring
Portfolio management

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