LONDON (Reuters) – The personal fairness trade has grown right into a pyramid scheme that can create casualties in round three to 5 years, the chief funding officer of Europe’s greatest asset supervisor stated on Wednesday.

Vincent Mortier, the CIO of Amundi, stated offers have been being achieved at exorbitant valuations and personal fairness companies have been on either side of the transactions.

“In some components the personal fairness market could also be like a Ponzi scheme,” Mortier advised reporters.

“What you see is that the overwhelming majority of offers at the moment are being achieved between personal fairness companies. One personal fairness agency will promote to a different who’s completely happy to pay a excessive worth as they’ve attracted numerous buyers.

“The majority of offers are like this.”

Personal fairness companies have been a significant power in driving M&A exercise in the course of the pandemic, snapping up belongings from sports activities golf equipment to supermarkets.

On Wednesday, New York-based funding agency RedBird Capital Companions agreed to purchase Italian Serie A soccer membership AC Milan for 1.2 billion euros ($1.28 billion) from U.S. hedge fund Elliot Administration, which took management of the membership in 2018 after its earlier house owners defaulted on their debt.

This 12 months’s greatest personal fairness transaction, at $60 billion, includes U.S. buyout fund Blackstone (NYSE:), which is a part of a consortium bidding for Italian infrastructure agency Atlantia.

Mortier stated that non-public fairness companies sitting on giant cashpiles from buyers had “a vested curiosity” and “you recognize you’ll be able to exit your stake to a different personal fairness firm at 20-30 instances ahead earnings”.

Whereas there have been alternatives involving severe personal fairness companies, he stated reckless dealmaking carried dangers.

“There isn’t any mark-to-market however it doesn’t suggest there is no such thing as a threat, no loss hooked up,” Mortier stated. “We can have casualties however they are going to be seen solely in three, 4, 5 years’ time.”

($1 = 0.9397 euros)