One feature of the COVID-19 crisis so far is the liquidity crunch it’s created. Major companies are drawing on credit lines and central banks are enacting emergency funding mechanisms as the global financial system feels the strain.

But one sector that hasn’t lacked for liquidity in recent months is private equity (PE). Coming into the end of last year, the world’s largest private equity funds had built up a cash war-chest worth trillions of dollars.

And amid a historic market crash, it looks like they may be gearing up to deploy some of that capital.

Overnight, the infrastructure fund of PE giant KKR signed off on a £4.2bn ($8.3bn) deal for UK-based recycling company Viridor.

A subsidiary of FTSE250-listed company Pennon Group, Viridor’s operations span across renewable energy and waste management.

According to an FT report, KKR adopted a post-crisis view of Viridor’s future earnings capacity, which is buffered by long-term contracts with UK clients.

In years gone by, big PE firms were famous for aggressive use of leverage to carry out huge buyouts. But this deal — all $8.3bn of it — was paid for in cash.

Viridor had a couple of other offers on the table, but went with KKR’s bid due to its relative simplicity in what has become a very uncertain climate. The deal was approved by Viridor’s board and is expected to be finalised in the northern summer.

Closer to home, private equity firms across the Asia-Pacific region are also gearing up to find some bargains amid the chaos.

According to Bloomberg, regional PE firms have been sitting tight on almost $US400bn ($750bn) in cash as valuations for private companies continued to soar.

However, amid an economic crisis not all PE firms are created equal. There are around 3,000 PE companies in the Asia-Pacific region jostling for a slice of the action.

And as conditions tighten, the big names such as KKR, TPG Capital and Blackstone are more likely to be able to use their cash buffer to their advantage.

In the meantime, volatility is likely to remain high as the bear market becomes more entrenched and uncertainty continues to drive the narrative around how the COVID-19 pandemic will play out.

But if stocks continue to sell off, it will be worth watching which big private equity players spot the opportunity to claim a bargain — and what sectors they target.