With domestic opportunities shrinking, U.S. private equity and real estate firms are going abroad once more for investments.
While many investors went to Asia following the financial crisis there in the 1990s, now Europe is the target, with alternative investment firms snapping up banks for their distressed debt portfolios, the infrastructure to service these loans and the ability to become lenders themselves.
A dominant player is Lone Star Fund, a real estate opportunity fund manager known for its distressed debt plays. Lone Star is said to be poised to buy Mitteleuropaische Handelsbank AG from Nord/LB, Hanover, Germany. Lone Star previously purchased a €2 billion ($2.59 billion) portfolio from Dresdner Bank AG, Frankfurt. Lone Star also owns banks in Korea and Japan.
Lone Star was one of the first U.S. funds to go after the distressed debt market in Germany, when it bought the shuttered Gontard & Metallbank in 2003. Lone Star executives declined to comment for this story.
Investment firms also are pursuing equity stakes, trying to gain a share of profits from strong European banks. The private equity investment unit of the C$140.3 billion (US$113.39 billion) Caisse de Depot et Placement du Quebec, Montreal, is buying a 10% stake in private bank La Compagnie Financiere Edmond de Rothschild Banque, Paris. And the private equity business of GE Capital Corp. is one of the suitors for NIB Capital NB, Amsterdam, the merchant bank owned by two Dutch pension funds, Stichting Pensioenfonds ABP and PGGM.
"Our investment enables the Caisse to partner with one of the best-performing merchant banks in France," said Henri-Paul Rousseau, chairman and chief executive officer of Caisse de Depot.