Billionaires Can’t Get Enough of Private Equity

After a record fundraising year, there are worries that private equity’s golden era is over.

Banks’ souring sentiment toward buyout loans and a drought in initial public offerings are pressuring both ends of private equity’s deal machine: the buying and selling of companies.

To make things worse, pension and endowment funds — the industry’s traditional cornerstone investors — may no longer have new money for their old friends. The culprit is their asset allocation rules. Over the years, pension funds have been raising their stakes in private equity, to juice returns and pay retirees’ bills. But after a global selloff in bonds and stocks, their PE allocation may be hitting the ceiling.