BERLIN - Is Europe a risk or an opportunity
As the region’s economy struggles, private equity managers offer different views about the region.
Speaking at the Super Return conference in Berlin, Henry Kravis, co-founder of Kohlberg Kravis Roberts, said Europe was an attractive market, particularly in the Continent’s southern countries that 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 in the early morning on Thursday 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.â€
Other private equity giants, including David M. Rubenstein of the Carlyle Group, also are 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 pain because of its close ties to fast-growing Latin American markets and effort to reform its local labor market.
Not every manager is so bullish.
J. Christopher Flowers, whose private equity firm bought an insurance broker from the struggling Belgian bank KBC for 240 million euros ($310) in 2011, said the future of the euro zone remained a major risk.
Europe’s prospects of recovery were hit again this week after Italian national elections on Monday failed to provide a definitive winner. The political impasse prompted significant losses across 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 like the pending forced sale of bank branches in Britain from the nationalized Royal Bank of Scotland. America, however, still remains his preferred region in which to invest.
“If a major economy like Spain defaults, we would prefer to be in Germa! ny,†Mr. Flowers said on Thursday. “If I had to pick one region, I would pick the U.S.â€
