Mixed signals make private equity a tough industry to predict. In some ways, 2010 has been less easy to navigate than the depths of the credit crunch. Back then the market moved in just one direction – down.

In the second quarter of 2010, private equity managers raised just $41bn, the lowest amount since 2003 and four-fifths lower than the peak three years ago, according to research group Preqin. Investors shied away from managers, who are anyway flush with unspent cash.

This alarm bell, though, does not seem to have rattled private equity managers. They racked up $43bn worth of deals globally in the second quarter, the highest level since the credit crunch began. Top of the list was the $3.9bn consortium buy-out of Extended Stay, a financially distressed hotel chain. The