BC Partners Remain Upbeat Despite Credit Crunch

by Stewart Douglas

Story link: BC Partners Remain Upbeat Despite Credit Crunch

BC Partners, the international private equity group have today said they are anticipating returns in excess of 20% on the group’s sub-prime linked investment portfolio, despite the ongoing unrest in the global credit marketplace, according to a top executive today.

Stefan Zuschke of the group’s German operation said that the group was still looking forward to returns of as much as a fifth from its portfolio, despite the collapse of the sub-prime sector which left many banks and investment firms heavily out of pocket and forced to take severe writedowns against their balance sheets.

Whilst it was said that the credit crunch made for difficult times for investment firms, given increasing reluctance from banks to put up the cash for acquisitions and buy-outs at the same rate as before, he added that 2008 would see a return to the previous levels of spending and somewhere in the region of the same level of market confidence and optimism.

Amongst some of the major problems for the group was what was seen as a general reluctance for banks to co-operate in takeovers valued at greater than 2 billion euros, which will mean that equity groups will be forced to pay more off their own back to secure deals.

However, Zuschke added that the decline in cost price spurned by the credit crunch should have a balancing effect, and will allow certain groups to pick up bargain-priced investments from across industry sectors.

The statements come at a time where larger investment banks are announcing strong losses against their current portfolio, along with suggestions that yet further writedowns may be necessary over the first few months of 2008 to readdress depleted balance sheets.