“As the prospect of a Greek exit overhangs the (European) Union, increased pressure on asset-owners is likely going to lead to fire-sales.”
~Macquarie analysts Emil Wolter and Aniel Mahtani
Investment banks are eagerly looking to the economic woes in Europe. Governments, businesses and individuals are potentially very vulnerable and where are distressed assets….there is much money to be made. It’s not a complicated idea; buy cheap and sell high. There will be pressure on European governments to further privatize public assets and assets will be bought by private equity companies intent on returning shareholder value to their billionaire investors. Those profits will come off the backs of working class Europeans.
From the Sydney Herald HERE:
According to Cohn, Europe’s total bank deleveraging could exceed $US2 trillion and Goldman Sachs is “well-positioned to intermediate these asset sales”.
“We believe that Europe and the growth markets will present compelling opportunities for the firm,” he said.
Cohn said the assets put up for sale were expected to be under-pressure debt securities backed by distressed assets.
Asked about a potential breakup of the eurozone amid severe financial strains, Cohn recalled that Goldman Sachs had “dramatically reduced” its European exposure.
The Wall Street Journal adds HERE:
The Australian bank said Asian buyers with deep pockets and low costs of capital are the most likely buyers in European fire sales. Macquarie thinks sectors such as infrastructure, industrials and telecoms, media and technology are the most attractive for Asian acquirers, as they offer the opportunity for Asian companies who may be seeing their margins squeezed at home to buy value-added technology and brands on the cheap, while giving them the chance to diversify geographically.
In addition, European jurisdictions have the added safety of being well-regulated, and offer stable returns at good valuations. State-backed firms can also try to bolster their geopolitical influence through strategic acquisitions.
Macquarie says in absolute value terms, European assets are extremely cheap given how far share prices and the euro have fallen.
Reuters adds HERE:
Currency weakness and share price declines in Europe are drawing Asian investors seeking to acquire brands with global reach and gain access to higher-value technologies.
Macquarie identified 53 European companies as potential asset sellers, the bulk of which are from Italy. Among them include Finmeccanica (SIFI.MI) and Enel (ENEI.MI).
Distressed assets in the infrastructure, industrial, and technology, media and telecommunications sectors are most likely to attract Asian companies, Macquarie said.
