Q&A with Meketa's McCourt on branching out into Europe

Alice Murray: Meketa has recently set up shop in London, what was the main driver behind this?

Stephen McCourt: London is our first office outside the US. The primary rationale for the office is to amplify our research activities across Europe, the Middle East and Africa, as well as across a wide variety of alternative asset classes.

AM: Will you be hiring people in London to staff up the office or bringing people over from Meketa in the US?

SM: The immediate plan is to bring over three existing employees from the US, on the research team.

As we go through the process of registering with the FCA and creating our client development strategy, it is likely that we will recruit at least one local to lead our client development activities over the next year.

AM: What are the key differences in investing in European private equity compared with US funds?

SM: The most significant difference is the diversity of the private equity environments. The US market is fairly uniform in geographic terms. In Europe there is a tremendous difference in private equity strategies and how they are executed, from the north to the south of the continent. Every country has its own unique aspects to be considered; the market is much more fragmented.

This leads to more geographic-specific managers than there are in the US. In the US, there are a lot of managers that invest across the country. In Europe, while there are several pan-European funds, there is a wealth of country-specific funds.

AM: Do US investors have more appetite for European private equity funds?

SM: Generally, US investor appetite for Europe is still fairly limited. In general, the private equity experience in Europe has not been as positive as in the US. Most of our clients view Europe in a more opportunistic manner, as opposed to looking at it as a region that requires allocation. US investors are looking at investments in Europe on a case-by-case, manager-by-manager basis as opposed to looking at the region as a whole.

The headwinds that US investors see in Europe are the obvious ones that have existed for the last few years, such as slow growth economy and lingering questions over currency. Furthermore, the track records of European private equity in general have not been as strong as its US counterpart.

It would take at least one of those factors loosening up before we see US investors coming over to Europe in a more substantial way.

AM: How have increased regulations in Europe impacted investors' views on the region?

SM: It has had a relatively minimal impact on US LPs. The biggest impediment to US investors are those issues previously mentioned; Europe's macro issues.

Increased financial regulation is happening everywhere, it's not unique to Europe. Ideally, regulation means greater transparency and more protection for investors. In that sense increased rules should only improve investor's view of the region.

AM: What are the most appealing areas of investment in Europe right now?

SM: The most attractive investment strategy in Europe at the moment is mainly debt, both corporate and real estate. A lot of US investors are moving cash over to Europe and into debt strategies.

The general consensus is that Europe is a couple of years behind the US in terms of its lending structure, as banks continue to move out of corporate lending. This has created more opportunities for investors to buy up loans at relatively low valuations. Most of these loans are corporate or real estate.

Another effect of diminished banking activity is the opportunity for direct lending funds and this is an area that many are pursuing.

AM: Will you be targeting new LP clients in Europe? If so, does this signal a move away from the fund-of-funds model for European LPs?

SM: In the US, our clients have moved away from funds-of-funds to more customised accounts. I believe the same movement will take place in Europe as well; I hope that trend continues here. And at the appropriate time we would be very pleased to bring on European clients.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Advisory
• UK / Ireland
• France
• Benelux
• Nordics
• DACH
• CEE
• Southern Europe
• Q&A
• Top story