Private Equity May Be on Cusp of "Golden Age"

NEW YORK (Reuters) - The near collapse of the global financial system, which wiped out trillions in corporate value and personal savings, may be giving way to a new "golden age" for private equity investment, Silver Lake Co-CEO Glenn Hutchins said in an interview on Tuesday.

Private equity firms suffered badly when debt markets seized up as a result of the crisis and banks did not want to lend increasingly scarce capital. Only just recently have credit markets started to unfreeze.

"The financial markets may be on the cusp of a new 'golden age' for private equity," Hutchins, who is also a co-founder of the firm, told Reuters.

Hutchins, the co-founder of the $13 billion private investment firm, cautioned that while there has been a significant stock market rally, the economy is showing stable, though not robust, growth.

"This recent stock market rally is a little troubling because it seems to me not to be supported by underlying economic fundamentals," Hutchins said.

"But that aside, we have gotten down to levels that are pretty attractive and the banks seem to be recovering enough to provide modest levels of financing, which is all we need. We feel pretty optimistic," he added.

The major concern he said is how long will investors have to be prepared to withstand low levels of economic activity.

But for the moment, Hutchins said, investors are once again finding risk premiums at attractive levels versus the low premiums before the asset bubble burst in December 2008.

"Now that the sort of panic of '08 is over and capital markets seem to be returning to some degree of normality ... companies will be able to access debt and equity markets like they have in the past. And that is no surprise," Hutchins said.

But he added that investors needed to be mindful that valuations in 2007 should not be defined as normal. They were an "overshoot in another way," he said.