BERLIN – Is Europe a risk or an opportunity?
As its economies struggle, private equity managers offer differing views about the region.
Speaking at the SuperReturn conference in Berlin, Henry R. Kravis, co-founder of Kohlberg Kravis Roberts, said Europe was an attractive market, particularly the Continent’s southern countries, which have been hit by high unemployment and meager growth.
“I like Spain, they are doing a number of right things,” Mr. Kravis told a somewhat empty conference room early on Thursday morning after many private equity managers had attended late-night dinners the previous evening. “In Europe, there clearly are opportunities. I may be in the minority.”
Other private equity giants, including David M. Rubenstein of the Carlyle Group, are also scouting for opportunities from Italy to Ireland despite concerns that the Continent may fall back into recession.
Lionel Assant, European head of private equity at the Blackstone Group, liked Spain because of its close ties to fast-growing Latin American markets and efforts to revamp its local labor market.
Not every manager is so bullish, however.
J. Christopher Flowers, whose private equity firm bought an insurance broker from the struggling Belgian bank KBC for 240 million euros ($315 million) in 2011, said the future of the euro zone remained a major risk.
Europe’s recovery prospects were hurt again this week after Italian national elections on Monday failed to provide a definitive winner. The political impasse prompted significant losses in the Continent’s stock markets as investors fretted about the future of one of Europe’s largest economies.
For Mr. Flowers, there are still some potential investment opportunities, including the pending forced sale of bank branches in Britain from the nationalized Royal Bank of Scotland. The United States, however, still remains his preferred region in which to invest.
“If a major economy like Spain defaults, we would prefer to be in Germany,” Mr. Flowers said. “If I had to pick one region, I would pick the U.S.”
This post has been revised to reflect the following correction:
Correction: February 28, 2013
An earlier version of this article contained an incorrect conversion of 240 million euros. It is the equivalent of $315 million, not $310.
Article source: http://dealbook.nytimes.com/2013/02/28/in-europe-risks-and-opportunities/?partner=rss&emc=rss