Private Equity in a Crisis: Evidence from the COVID-19 Pandemic

Abstract: Starting in March 2020, the COVID-19 pandemic caused a large unexpected negative shock to many firms and industries. We find that private equity(PE)-backed Swedish firms experienced a relative increase in investment, received more credit and equity inflow, and were more likely to receive government support in the year 2020 than comparable firms. Moreover, the impact of private equity is even more substantial among firms facing severe financial constraints. These findings are consistent with previous work studying the 2008 financial crisis, which indicates private equity helps target firms address financial fragility during the crisis.