Financial investors in difficult waters

Berlin skyline

The Super Return Conference will be held in the capital this week.

(Photo: imago images/Dirk Sattler)

Frankfurt When the top managers of billionaire private equity funds gather in Berlin this week for the Super-Return Conference, some will wonder whether the world’s most important meeting place for the industry is still rightly named. A whole range of stress factors is putting pressure on the business model of financial investors.

The long phase of low interest rates ensured that the investment companies were able to buy medium-sized companies and parts of large corporations with cheap credit. After a few years, the financial investors passed on the investments at a higher price or listed them on the stock exchange.

But after the historic turnaround in interest rates, takeover financing has become expensive and rare, new funds are getting less money than before and portfolio companies have to cut costs rather than focus on growth during the recession.

“Financial investors are under pressure from many sides, this is a new situation for many investment managers,” says Christian Kames, Managing Director at the investment bank Lazard.

The list of challenges is long:

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