End of good times is no bad thing

Things have slowed considerably in the current market uncertainty, meaning that investors are busily seeking alternative ways to maintain deal flow in Southern Europe. The end of the buyout boom and leveraged acquisitions need not be considered as purely bad news.

In the Southern European mid-market there is a shift towards consolidation, in particular towards non-cyclical sectors such as healthcare, energy, telecom, services, and infrastructure management.

Recently the Spanish health sector has seen the acquisition of Xanit Hospital in Malaga by Dinamia/N+1 in a deal valued at more than EUR40m; while GED, another Spanish operator, acquired health provider Cellulem Block for EUR9m. Similarly, in the telecommunications sector we have seen the acquisition by Carlyle and Mercapital of internet hosting company Arsys for EUR160m.

So, while the times of quick returns may have come to an end, this crisis will allow the system to cleanse itself. As Franco Mosca from IDeA SgR put it: "The industry will reinvent itself like it has it the past. It is its nature."

In the meantime, rather than being deterred in their investments, LPs are being more selective in their funds selection. (Page 12).

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