Private equity (PE) has long been a darling of the investment world; hard to access and expensive, but desirable for its attractive returns profile. However, after several booming years, the PE sector has been struggling. Since mid-2022, investment, fundraising and exit activity have all fallen. 

This can be partly attributed to today’s higher interest rate environment and, indeed, there were certainly PE funds that relied heavily on low interest rates to achieve the returns clients were demanding. However, that does not necessarily mean a higher interest environment spells trouble for PE investors across the board. In fact, it provides an opportunity for a certain subset of investors to build a portfolio of funds they perhaps could not have accessed before. The key here is to be selective and pick managers carefully, focusing on quality rather than spreading one’s bets.