Here we answer some additional questions from the audience we didn't get time for in the live discussion between Steffen Pauls and Johannes Huth.
Q: How would you rate the competition now with respect to deal sourcing? Are you seeing fierce competition for assets and if so how are you keeping an edge?
A: Yes, competition is tough but we think we have developed some key differentiating angles in our European business that really help us. I would cite three of these in particular:
Q: In terms of the quality and size of the opportunity set, are there particular geographies that stand out for you right now?
A: In Europe, the DACH region has always been an incredibly active region for us and we expect this to continue. Also, in spite of the uncertainty caused by Brexit, the UK has historically been the largest buyout market in Europe by deal volume, and we do think we will continue to see interesting opportunities emerge there.
One region where we have recently further stepped up our efforts is France. I am personally spending a lot of my time in France today and we have grown the team in our Paris office which is really starting to bear fruit in terms of deal flow.
Q: You mentioned the idea of monetary policy and its effect on asset prices. What do you tell friends or partners who believe they can get rich in the stock market, or who think they should be overweight public equity to participate in these increasingly high public equity prices?
A: In my opinion private equity has had and will continue to have a risk/reward profile that makes it a valuable addition to a portfolio, for investors with a long horizon. Private equity’s performance reflects the illiquidity premium and the value added by the sponsor through M&A support, internationalization, digitization, and other tools of active ownership. And for investors who want access to fast-growing companies, private markets can offer a greater range of opportunities than public markets.
It’s getting better, but European public markets still have a relatively small share of fast-growing, technologically enabled companies, for example. Many of those kinds of companies are still in private ownership. So, my advice would be to consider the whole spectrum of potential opportunities, not just public markets.
Q: Could you name 2-3 trends you expect to emerge this year in the private equity industry?
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