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Private-equity managers are continuing to invest at a record pace while attempting to manage uncertainty around interest rates, inflation and global geopolitics, a report from consulting firm Bain & Co. said.

In buyout deals, exits and fundraising, the industry set records last year, according to the report, released Monday by the Boston-based firm. Fund managers continue to deploy capital at the same furious pace this year despite new macroeconomic risks, said Brenda Rainey, executive vice president of Bain’s global private-equity practice.

The private-equity market coming out of 2021 is “absolutely booming," she said. “The velocity of money is at an all-time high."

Still, the market “could tip sideways. There’s a lot of money going in at high valuations at a time of great uncertainty," she said.

After a pandemic-related slowdown in 2020, the industry kicked into high gear in 2021.

Private-equity firms last year invested a record $1.12 trillion in buyout deals world-wide, nearly double the 2020 total and far ahead of the previous record of $804 billion, set in 2006. Buyout exits also reached a new peak, valued at $957 billion globally, more than doubling the 2020 sum. Fundraising, too, set a record as private-capital fund sponsors raised almost $1.23 trillion globally, a roughly 14% increase over 2020.

So far this year, the pace has stayed extremely high despite major emerging risks, Ms. Rainey said. Russia’s invasion of Ukraine has had a muted effect so far because private equity has a generally low profile in both countries, though firms remain on guard for potential ripple effects, she said.

Rising inflation may present more of a challenge for private-equity firms, though they are developing strategies for managing that risk, the report said. The increase in deal multiples over time, fueled by low inflation and rising asset prices, has been the main driver of value creation for buyout deals over the past decade, meaning firms have lost ground in terms of generating internal growth at portfolio companies, the report says.

To reverse that trend and combat inflation, fund managers need to closely monitor the costs of the goods they rely on to anticipate cost rises and lock in price increases for their companies, the report said. It said firms may need to consider owning companies longer to make operational improvements rather than “surfing on multiple expansion," which will likely be tamped down by inflation.

While growth-focused publicly traded stocks have seen their prices fall on expectations of higher interest rates, private-equity growth investing has continued to surge, Ms. Rainey said. In 2021, growth-equity and late-stage venture deal making totaled $685 billion world-wide, the most for any year on record for the strategy, as private-equity firms have leaned on developing new technologies to create value at their portfolio companies, the report said.

Investors do not see rising rates and geopolitical risks as a reason to pull back from growth investing, said Ms. Rainey.

“Growth is a place we do not see any retrenchment," she said. “On the contrary, we see a tremendous opportunity."

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