(Bloomberg) -- Robert Seminara, head of Europe at Apollo Global Management Inc., says he’s seeing a sharp pick up in private equity dealmaking, predicting returns for investors getting into the asset class today will prove “very attractive.”
“What we’re seeing right now is a convergence between buyer and seller expectations and a pick up in transactions,” Seminara said on Bloomberg Television, noting that pressure from investors pushing for the return of capital is helping to drive activity. “We’ve been incredibly active recently, putting out $2 billion here in Europe alone.”
Seminara was speaking as the private equity industry gathers for the IPEM conference in Paris. It’s been a difficult year as the global M&A environment has been slow to restart and firms have struggled to return cash to their investors. But many are increasingly hopeful against a backdrop of stable, if not, falling interest rates.
Mark Benedetti, executive president at Ardian SAS, also expects “very active” private equity deal flows in the fourth quarter and the first quarter next year as assets are performing well. About 25% of the money raised in private equity markets in buyouts is more than four years old and managers are under pressure given the typical mandate to invest within five years, he said.
“Groups have to start putting money to work,” Benedetti said on Bloomberg TV. “The bid-ask spread should start to narrow.” However, the initial public offering market continues to be frozen for mid-cap companies, he said.
Another attendee, Alisa Amarosa Wood, a partner at KKR & Co., said capital markets are normalizing and transactions were picking up. Corporate carveouts and partnerships with families are helping driving deal flow in Europe, she said.
Still, those relying on cheap debt to boost returns “have a problem,” she said.
In private credit, Seminara expects his firm to continue its strong growth. “We think it’s a golden opportunity for private capital,” he said, talking about the potential to partner with corporations on their investment projects such as Apollo’s $11 billion investment in an Intel Corp. investment program.
Earlier this year, Apollo CEO Marc Rowan laid out goals to double private credit origination after posting record annual earnings.
Stable Regulation
Managing partner Frederic Stevenin of PAI Partners said that Europe should prioritize stable regulation as governments increasingly try to encourage private capital to invest in aging sectors outside of the digital economy.
“Across Europe you see more willingness to engage with capital providers,” he said. “Whether it’s enough for the acceleration to happen, I’m not sure.”
Gabriel Caillaux, co-president of General Atlantic, said while there has been almost no slowdown in innovation and growth in the firm’s technology investment portfolio despite the regulatory and geopolitical risks, it has become more difficult for entrepreneurs to build international businesses.
“It is becoming harder to build a global champion and it’s becoming harder to grow internationally, and that’s a shame,” he said.
On the IPO market, the slowdown is “great for private capital because we are stepping into that void,” according to Caillaux.
“It’s providing huge investment opportunities, probably one of the best I have seen in my career frankly,” he said. “But we need the capital market, the IPO market come back.”
(Updates with General Atlantic interview.)
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