Private equity specialists revel in Europe opportunities, say Akina
While Europe’s politicians buy time, private equity investors are buying assets. The endless muddle-through summits, the austerity plans and the deleveraging among all institutions points to low growth which is bad news, right?
Not for private equity, notes a report from Zug-based Akina Partners, an independent advisor to private equity funds and mandates investing in special themes.
“Tight credit, tough business conditions, a changing regulatory landscape and thinning competition are setting the stage for some very strong vintages,” the firm notes.
“On top of that, we’re seeing the emergence of a vibrant and growing secondary market, adding to the possibilities for savvy investors. For those prepared to take a contrarian view, today’s turbulent environment may result in some once-in-a-lifetime opportunities.”
However, it is not for the reckless or ill-informed. In a study of 11 countries the possibilities are decidedly mixed, depending on economic outlook. “Post financial crisis, an already complex region is becoming more heterogeneous,” the report says.
Natalia Popova, Principal and Head of Primary Investments at Akina, says uncertainty is affecting private equity markets, like all others.
Activity is subdued, fundraising soft, and underlying companies under pressure.
“It’s understandable if many investors choose to stay on the sidelines,” she comments. “(But) we think those who do may live to regret it. Historically, tough economic times have often been very good for private equity, certainly in the small to mid market. Today’s conditions will result in healthy deal flow at very interesting entry levels.”
To take advantage, however, investors require contrarian thinking. Despite some good moves with LTRO and the beefing up of the European Stability Mechanism (ESM), the situation remains dire, especially among the banks.