Private equity bosses turn bullish on Europe
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BERLIN – The world’s largest gathering of private equity professionals is abuzz with optimism about opportunities in Europe, marking a significant shift from the previous year.
This positive sentiment comes amidst subdued dealmaking, limited new listings on public markets, and volatile policy decisions by U.S. President Donald Trump.
Blair Jacobson, co-president of private equity firm Ares Management, expressed his belief at the SuperReturn conference in Berlin that European markets are currently very appealing.
Factors contributing to this optimism include declining interest rates and Germany’s 500 billion euro fiscal stimulus package. Jacobson also highlighted the positive implications of the Draghi report from last year, which emphasized deregulation and enhancing European competitiveness.
“Europe is asserting itself and shaping its own future, which can lead to positive macro trends,” he stated, noting a stronger attraction towards Europe rather than a push away from the U.S.
Ares is increasingly focusing on its international investments and sees significant opportunities outside the U.S. Jacobson cited the recent acquisition of global alternative asset manager GCP International for $3.7 billion as evidence of their growing exposure in Europe and Asian infrastructure.
The optimism towards Europe contrasts with a decrease in interest from institutional investors. Data from Prequin reveals a 69% drop in funds raised for Europe-focused private credit funds, standing at nearly $26 billion compared to the peak of $82 billion in 2021.
Blackstone’s Vice Chairman Thomas Nides echoed Jacobson’s sentiments, highlighting increased political stability in France, Germany, and the U.K. as a reason to consider shifting investments into Europe.
Nides acknowledged the subdued M&A and IPO activities during a period of tumultuous policymaking in Washington but expressed confidence that this phase will pass.
Asset managers are expanding their presence in Europe in anticipation of new opportunities. Tamsin Coleman, a private debt specialist at Mercer, mentioned that while there hasn’t been a significant capital shift from the U.S., there is a slight adjustment among investors who were previously overweight in the U.S.
Defense push
During the SuperReturn conference, discussions on Wednesday highlighted digital infrastructure such as data centers, energy efficiency, and defense as key areas of growth potential in Europe. Ivano Sessa, partner and co-head European private equity at Bain Capital, emphasized the unique growth potential and visibility in the defense sector.
Julian Salisbury, co-chief investment officer at Sixth Street, pointed out the valuation gap between European and U.S. assets since 2008, emphasizing the opportunity for private capital to invest in Europe at lower valuations.
Despite the positive outlook, challenges in regional investment persist. James Reynolds, global co-head of private credit at Goldman Sachs Asset Management, emphasized the complexities of operating in Europe and the scarcity of investment opportunities.
Rajaa Mekouar, co-chief operating officer of Belgian single family office Capnor, expressed skepticism about the extent of capital inflows from the U.S. to Europe, citing different dynamics within European countries compared to the U.S.
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