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?
In many cases, they have been holding on to poorly perfroming assets since 2009, waiting for things to get better. "They can't wait forever, and in 2012 we think the day of reckoning will arrive," added Popova. "That's a lot of pent-up supply which will have to go, often at significant discounts."
On the demand side, continuing economic uncertainty will keep investors away, meaning less competition for those prepared to engage. Some 80% of funds that last raised around 2007 have postponed their next fund-raising cycles due to lack of interest.
"All this means some very interesting entry levels in Europe right now, especially in the mid-market segment," said Popova. "The higher end, which has always been driven by debt, is not seeing such a large difference in valuations compared with the past.
Among the strategies Akina thinks are set to flourish are Buy-and-build via divested companies, if there is "profound understanding of the individual industries"
Country-specific niche strategies will benefit from areas which are doing well, such as Germany or the Nordics. Contrarian strategies, which look at places others avoid also hold promise. It can be an overlooked country like Finland, or sector, like Turkish industrials.
Specialist industry strategies are perfect for funds with the talent and expertise to optimise their businesses within a given industry.
"The one factor they all have in common is that taking advantage requires specialist knowledge," said the Akina report. "For all its promise, this is not an environment for the casual or generalist private equity investor."
Akina's Euro Choice flagship funds, which invest in the European
mid-market sector, have attracted €1.6bn from clients around the world. However, the firm warns: "The window of opportunity is likely to be short: one or two years at the most."
Read the full report at: http://www.akinapartners.com/news/quo-vadis