Private equity drawn to debt lifeline

BOOMING credit markets are throwing private equity firms a lifeline as they strive to return cash to investors: Instead of relying on the initial public offering (IPO) market, they can pile portfolio companies with more debt and give themselves a payout.

Dividend recapitalisations, where a firm borrows money for a payout to its owners, are an increasingly popular alternative to the usual dual-track options of listing or selling portfolio companies, according to multiple bankers.