Alternative asset managers have provided the Bank of England with detailed data on private markets investments across 520 UK companies, as the central bank examines the potential economic impact of a downturn in private markets, according to a report by Bloomberg.
The companies covered by the exercise generate more than £230bn in revenue and include 130 businesses backed by private equity and around 440 with private credit obligations. Some companies use both private equity and private debt financing.
The data was submitted by 17 asset managers taking part in the BoE’s System Wide Exploratory Scenario, which is testing how financial institutions would respond to a severe market shock, including a 35% fall in UK share prices and interest rates rising to 7%.
The BoE found that around 60% of companies using private credit had EBITDA of less than £50m, compared with around 30% of private equity-backed companies. Median leverage across both groups was around six times net debt to reported EBITDA.
The central bank also gathered information on around 180 private credit funds with £370bn of total capital and approximately 85 private equity funds with £400bn of total capital. Around half of those funds had little or no leverage secured against fund assets.
