Apollo Executive: Capitulation on Private Equity Valuations Inevitable

Scott Kleinman, Co-President of Apollo Global Management Inc., stated that the private equity sector 'lost its way a bit' during the era of easy money. Kleinman indicated that following the normalization of borrowing costs, firms will 'definitely have to start capitulating' on valuations. Kleinman emphasized that investments made in a low-interest-rate environment are unsustainable under current market conditions. He said private equity firms will be forced to write down the values of assets in their portfolios amid rising borrowing costs. These remarks come at a time of increasing valuation pressures in the sector. Kleinman noted that it is inevitable for firms to move toward realistic valuations and that this process will be healthy for the industry. This is not investment advice.