Wall Street’s referendum on Europe
At the glitzy Jumeirah Carlton Tower in London’s Knightsbridge district, some of the biggest names in finance on Tuesday gathered for an exclusive FT get-together.
Apollo’s Marc Rowan and Blackstone’s Jon Gray were joined by the likes of Per Franzén and Rob Lucas, chief executives of European private capital giants EQT and CVC.
One subject that kept cropping up was the twin downfalls of auto subprime lender Tricolor and car parts maker First Brands, and the prospect of contagion in credit markets.
But the conference was also a check-in on the bullishness that’s swept across Europe this year, as institutional investors have recalibrated their exposure to the US amid Donald Trump’s volatile second stint in the White House.
Among C-suite executives who oversee hundreds of billions of dollars, there isn’t a consensus on where Europe stands in the world’s financial pecking order. Even still, they largely see the continent as ripe for investing.
Rowan came out with the hottest take: “Every problem that we have in the US is worse here [in Europe].”
That’s not always a bad thing for him. Being behind the US also meant that the region would grow faster with respect to private capital investments, Rowan added.
Apollo has already thrown money behind that thesis. In July, the firm agreed to buy UK retirement savings group Pension Insurance Corporation, which Rowan on Tuesday said “will be to the UK market what Athene is to the US market”.
Gray was even more bullish about the US, saying that the “American exceptionalism” narrative was strong as ever.
The leaders of EQT and CVC had a more optimistic view. Franzén and Lucas recognise Europe’s trailing the US. But the fate of their firms is more deeply intertwined with that of the continent, as both are headquartered in Europe.
“Those very inefficiencies that Europe has allows us with all of our resources . . . to find opportunities and add value to them,” said Lucas.
While the US, he argued, had more momentum behind it, Europe’s idiosyncrasies allowed CVC to generate returns from various sectors.
Franzén agreed, adding that across the continent, EQT saw plenty of opportunities to generate “real alpha”.
Even a Switzerland-based institutional investor conceded that allocation to America isn’t going anywhere, despite the political upheaval taking place in Washington and the question marks hanging over the future of the US economy.
“Look, you can’t short the US, that’s just the bottom line,” said Ivan Vercoutère, the global head of private equity for the Liechtenstein’s royal family’s LGT Capital Partners.