The private equity business is losing its unique edge. Agencies like Ares Management (ARES.US) and Kuroishi (BX.US) have stolen deals from under the guise of giants such as JPM.US (JPM.US) and used their ability to provide customized terms to reap huge returns. The difference today is that the banking sector has made a strong recovery, while direct lenders are investing heavily in retail instruments, which provide investors with an opportunity to cash out. All in all, the $2 trillion private finance industry is becoming more and more like the public credit industry, which means declining returns.

The private equity business is losing its unique edge. Agencies like Ares Management (ARES.US) and Kuroishi (BX.US) have stolen deals from under the guise of giants such as JPM.US (JPM.US) and used their ability to provide customized terms to reap huge returns. The difference today is that the banking sector has made a strong recovery, while direct lenders are investing heavily in retail instruments, which provide investors with an opportunity to cash out. All in all, the $2 trillion private finance industry is becoming more and more like the public credit industry, which means declining returns.