PE bosses brace for more bad news

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Munich: Private equity executives on Tuesday forecast that more bad news is likely to come from the credit meltdown.

"I think we are seeing a meltdown in the credit markets that has some life in terms of the downside left to it," said Scott Sperling, co-president of Boston based private equity firm Thomas H Lee Partners. He predicted that it could take months for banks to clear billions of dollars of debt left by the credit crisis. Sperling was speaking on a panel at the "Super Return" conference in Munich.

Thomas H Lee, alongside Bain Capital Partners, is behind the $20-billion buyout of the U.S. radio operator Clear Channel Communications, a deal still to close.

Steven Puccinelli, head of European private equity at Investcorp, speaking on the same panel, said deals over the next 12 to 18 months would be hard to come by, but buyout firms were keeping busy tending to their portfolio companies.

A number of deals were renegotiated or even pulled because of the worse conditions. Sperling said that anyone selling his company will look at the situation that we?ve confronted in the last year and say I may need to change the terms of the deal. The turmoil is hitting private equity investors' expectations.

CalPERS' senior investment officer Leon Shahanian said the pension fund had reduced their expectations of returns.

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