What the Sunday papers said

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Related tags: Private equity, Real estate investment trust, Interest rate, Monetary policy

Swedish drinks giant Vin & Spirit, which manufactures Absolut vodka, the world's third largest spirit brand, is currently the subject of huge...

Swedish drinks giant Vin & Spirit, which manufactures Absolut vodka, the world's third largest spirit brand, is currently the subject of huge interest from the world's largest spirits companies, including the US' Constellation Brands. V&S is state owned, but Sweden's new government has pledged to sell off a number of nationalised companies. Bankers are valuing V&S at around £3bn. - Independent On Sunday

Property entrepreneur Richard Balfour-Lynn is working with the Royal Bank of Scotland on plans to create a £2bn real estate investment trust (REIT) focused on the hotel sector. Balfour-Lynn's hotel portfolio includes the Grand in Brighton and Cavendish in Mayfair. City sources said the talks with RBS were "serious" and despite being at a preliminary stage all sides were hopeful the plan would come to fruition. - Sunday Times

The private equity sector has galvanised business and should mean interest rates should rise no higher than the current 5.25 per cent. But Ernst & Young's Item Club, which uses the Treasury's forecasting models, says "reports of a wall of money poised to move into the markets are worrying. Further increases in asset prices would lead to over-valuation, over-investment and misallocations of capital and labour resources, as we saw in the Nineties high-tec boom". - Mail On Sunday

Leading economists are anticipating an interest rate rise of a quarter of a point in February. "We expect the Bank's Monetary Policy Committee to raise rates by 0.25 per cent to 5.5 per cent next month," said Philip Shaw, an economist with Investec. - Sunday Express

Private equity players, many of whom were behind last year's boom in pub mergers and acquisitions, are quietly building themselves protections into buyout agreements as they prepare for the coming downturn. Newly developed clauses such as 'yank the bank' or 'snooze and lose' allow private equity firms easier ways out of the loans they use to buy companies. The use of such clauses is causing concern that the industry is saddling investee companies with dangerously high levels of debt that allow them to take profits now but leave little room for manoeuvre should market conditions turn sour. - Independent On Sunday

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