Necessity is the mother of invention

This slowdown is relative; when you have been driving at 180km/h over a prolonged period and assuming it is the normal speed, going back down to 90km/h might seem like slow motion. Yet at this speed, the industry remains true to its nature of reinventing itself. In this case, it is looking to emerging markets for opportunity.

Let us take for instance recent exits in the region, which show an increased interest from industrials, including some from emerging markets. This was the case in Innogest's sale of its 20% stake in high-tech player Singular ID to Indian pharmaceutical company Bilcare's Singapore subsidiary, reaping a 200% IRR in five months. This came hot on the heels of a sale by Arca Impresa of engineering firm Cemp to Indian industrial group ABG and private equity fund Tano Capital, netting an IRR of 16% and a cash multiple of 2.2x. However, this is just one of the recent trends we have begun to see.

Emerging economies are presenting private equity with many opportunities, highlighted most recently by Advent's EUR1bn close of ACEE IV, dedicated to Central and Eastern Europe. Similarly, private equity houses have been seeking financing with institutions not (so) directly affected by the sub-prime crisis. An example of this is the 51% stake acquisition by BC Partners of supermarket chain Migros Turk for $3.25bn. The deal was carried out in conjunction with Turkven Private Equity and DeA Capital, with 50% of the financing provided by three local Turkish banks.

At the same time, Southern Europe has a few players looking to fast-growing markets. For example Cape Natixis and Mandarin Capital Partners have been active in the Chinese market for a few years. As the slowdown persists in the global credit markets, we can expect GPs to persevere in their hunt for new innovative ways of adding value.

Yours sincerely,

Francinia Protti-Alvarez

Editor, Southern Europe unquote"

Tel: +44 20 7004 7476

francinia.protti-alvarez@incisivemedia.com.

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• Southern Europe
• Industrials