“The Clock Is Ticking”: Kuwait’s Sovereign Wealth Chief Sounds Alarm on Private Equity Valuations

Doha, Qatar — May 2025 — One of the world’s most influential sovereign wealth funds has issued a stark warning to the private equity industry, signaling that time may be running out for firms operating under outdated valuation models and opaque financial practices.

Sheikh Saoud Salem Al-Sabah, Managing Director of the Kuwait Investment Authority (KIA) — which oversees a staggering $1 trillion in assets — told attendees at the Qatar Economic Forum that the private equity sector faces a critical inflection point. Speaking candidly during a panel discussion, he criticized the industry’s reliance on inflated valuations, opaque underwriting methods, and the growing use of so-called continuation vehicles to delay the return of capital to investors.

“Private equity is very troubled, I believe — especially in large buyouts, venture capital, and the rise of continuation vehicles. That’s a very worrying sign,” said Sheikh Saoud. “Their time is coming up.”

Mounting Pressure and Liquidity Squeeze

For years, private equity firms — and their venture capital cousins — have struggled to return capital to investors, also known as limited partners (LPs). The problem, Sheikh Saoud noted, is compounded by a sluggish M&A and IPO market, leaving many firms unable to monetize their assets.

Continuation vehicles, which allow general partners (GPs) to hold onto high-performing assets beyond their original fund lifespans, have become an increasingly popular workaround. But critics argue they merely delay the inevitable: the need to generate real liquidity.

“Now LPs are asking for their money back,” Sheikh Saoud warned. “The clock is ticking.”

Transparency in Question

In a pointed critique, Sheikh Saoud urged limited partners to demand greater transparency from fund managers. He encouraged them to scrutinize the underwriting processes behind private equity acquisitions — particularly the valuation multiples applied in different fund vintages.

“If they refuse to show you, they’ve been doing something wrong,” he added, implying that some private equity managers may be obscuring problematic investment strategies.

His remarks echo growing global scrutiny. The UK’s Financial Conduct Authority (FCA) is currently undertaking a wide-reaching review of private market valuation practices, reflecting broader regulatory concerns about inconsistencies and inflated asset prices in the sector.

Venture Capital Not Spared

Sheikh Saoud also called out the venture capital industry, which is facing parallel challenges. Startups are taking longer to scale and achieve profitability. Some founders, even after reaching maturity, are choosing to remain private — limiting VC firms’ exit opportunities.

This prolonged timeline means fund managers are stuck in limbo — unable to cash out, repay investors, or reinvest in the next generation of high-growth startups.

Silver Linings in Secondaries and Special Situations

Despite the gloomy forecast, Sheikh Saoud noted some “certain opportunities” remain. The secondaries market, where stakes in private equity funds and individual assets are bought and sold, has seen increased activity. Similarly, special situation investments — such as distressed assets or turnaround plays — may offer returns in a challenging environment.

“The opportunities in private equity are in secondaries and special situations,” he explained. “It is because of the need for private equity to return capital to LPs.”

A Tipping Point for Private Equity

Sheikh Saoud’s comments carry significant weight. The KIA is the world’s third-largest sovereign wealth fund and the second-biggest in the Middle East, a region that collectively manages over $4 trillion in sovereign assets. For decades, funds like KIA have been major backers of private equity globally.

Now, however, the tide may be turning. With institutional patience running thin, and regulators sharpening their focus, the private equity industry may be forced to rethink how it values, manages, and exits its investments.

BATV will continue to monitor this developing story as private capital markets confront increasing scrutiny and calls for reform.

For feedback: contact the BATV Editorial Division at: info@batvja.com