Private Equity Giants Are Having Cash Flow Problems
There’s a whiff of desperation at SoftBank and Fosun, which have had to unload crown jewels to keep their balance sheets looking tidy.
Illustration: George Wylesol for Bloomberg Businessweek
Private equity firms are supposedly masters of the business universe, spotting the hottest trends and giving survival tips to their portfolio companies during economic downturns. But do they know how to manage their own cash flows? Investors are taking a hard look at some of the industry’s biggest names.
Take SoftBank Group Corp., which recently raced to unload some of its crown jewels. The company has used “prepaid forward contracts” to monetize its Alibaba Group Holding Ltd. shares. In August, the tech unicorn investor said it decided on an “early physical settlement,” which cut exposure to its most valuable asset by almost half—when the shares were roughly 70% below peak.