Businesses backed by private equity face heightened default risks, warns Bank of England

The research highlighted that over two million UK workers are employed by businesses backed by private equity funds, which account for 15% of the country's corporate debt.

The Bank emphasised that improved transparency within the private equity sector would help mitigate some of these vulnerabilities, noting clarity around valuation practices could reduce risks.

Despite concerns about default risks, private equity plays a crucial role in funding UK businesses and supports companies during economic stress, as per the British Private Equity & Venture Capital Association.

In 2023, more than one in five PE-backed companies were at risk of default, an improvement from one in four in 2022, but still significantly higher than other large businesses.

Read at Business Matters