"If everyone knows where the cheap money is, they are all going to go to the same place to get the cheap money. Until it runs out.
And how will it run out?
When the Bank of Japan increases interest rates. Then global liquidity dries up.
There’s a wonderful story about a village where there’s only one pig. One guy sells the pig to the neighbour at one price and the neighbour sells it to another guy at another price and the pig keeps circulating around town and everyone’s making money off the pig. And then one guy doesn’t quite understand. He buys the pig and kills it. Everyone's mad at him. "Don’t you know this is how we make money?" they say. He says, "I was hungry, I thought we were supposed to eat this pig."
And that’s what’s happening with private equity now.
There’s a pig going around the world and one day, Japan’s going to kill it."
Hlelo Giyose, Fund Manager, Stanlib
Speaking at Wits Business School's panel debate on “The Rise of Private Equity. Is South Africa a new target?”
May 30, 2007