LONDON (Reuters) - Homeowners may worry about renegotiating their mortgage as the value of their property tumbles, and similar worries plague hedge fund and private equity managers. Only the scale is bigger.
Asked what kept them awake at night, the once high-flying dealmakers often dodged the question by naming their newly born -- or adolescent -- children.
But pushed to stick to business, the answers came relatively easy, ranging from anything from a dearth of capital, the bankruptcy of a company they own, or heavy policing of their businesses from regulators.
"I can withstand it for six more months, I could even withstand if for a year or 18 months. But I couldn't withstand it for three years," said David Giampaolo, Chief Executive of private equity boutique Pi Capital.
"It's going to be all of 2009 before the fog will clear enough to have an informed view with a degree of visibility on where to deploy one's time or money," he said at the Reuters Hedge Funds and Private Equity Summit in London.
The financial crisis has done great damage to the reputation of hedge funds -- blamed for their role in the crisis by aggressively playing markets -- and private equity houses that piled heavy debt loads on corporate balance sheets.
"Private equity-owned companies are going to fail in the recession... and that's what worries me," said Simon Walker, Chief Executive of British Venture Capital Association, which represents private equity firms.
METEORITES
After a tumultuous 18 months in the financial world, the biggest worry for some is the risk that comes as unexpectedly as the sudden freezing up of interbank markets that heralded the start of the crisis in October 2007.
"What keeps me awake at the night is what's going to be the next meteorite," said Andrew Baker, chief executive of the Alternative Investment Management Association (AIMA), a global hedge fund trade body.
"If there was a standard template that the industry could adopt in order to survive, that would make life easier."
Others again named a worry most of us will have been familiar with at some stage -- a lack of money.
"If the capital is not going to come from the government -- because the money's run out -- or from the banks, where is it going to come from?" AIMA's Baker asked.
Andrew Newington, managing partner of BC Partners, said "the prospect of having to negotiate restructuring with banks that are closed" is his biggest worry at present.
And as regulation looms over the hedge fund industry -- with leaders such as German Chancellor Angela Merkel and French President Nicolas Sarkozy urging tougher rules for hedge funds -- some worry about the end of freedom. Continued...
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