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Private Equity and Private Debt II






 Last week I said a few words about private equity and private debt. My interest was in the investment funds that go by those two names. My chief point was that there is a trend that consists of mergers between PE and PD at one extreme, mere "alliances" among dyads of a PD and a PE fund on the other extreme. Creative contracting can create a lot of way-stations between those two extremes, but I won't go into that today. 

What I'd like to do is to offer an answer to an obvious question: what does this matter? To those of you who aren't in the asset-management world, nor yet in the world of reporting thereon: should you care?

Well,you might want to care IF you worry about efficiencies in either of the corresponding public markets. If those markets (stock exchanges, and the bond trading of government issuances or of the issuances of companies that have equity on stock exchanges) were as efficient as they could be there wouldn't be a pressing need for vigorous private markets. But private markets are a critical escape valve when public markets are dysfunctional as, at present, they are. 

For evidence of the dysfunction, I refer you to fine works of book-length journalism such as Scott Peterson's DARK POOLS (2013) and Michael Lewis' FLASH BOYS (2015). That is Michael Lewis in the photo above. Some years have passed since the early teens of this century. But nothing those authors lament has gotten better since then.   

So two cheers for the private side of the markets!!

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