Carlyle Group’s Rubenstein: Europe Still ‘Very Attractive’

Thursday, 28 Feb 2013 08:02 AM

By Michael Kling

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To hear many observes, you’d think Europe is on the edge of the abyss following Italian elections that are expected to leave that country in political gridlock.

But David Rubenstein, co-founder and managing director of the Carlyle Group, begs to differ.

“Europe is the biggest economy in the world,” Rubenstein told CNBC.

Editor's Note:
'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

“As I’ve said before, it’s the largest emerging market and prices have been beaten down — you can buy things at distressed prices now so I think it’s a very attractive market in which to invest.”

Although multiples in Europe are higher than they are in the United States, prices are still good, he said.

“There’s no doubt that multiples in Europe are a bit higher than in the U.S., but there is more competition in Europe for particular assets,” Rubenstein told CNBC, adding that the Carlyle Group is seeking to buy distressed assets.

“Make sure there’s enough equity in a deal and you’re not paying too much for an asset that doesn’t have any growth prospects.”

While the company is bullish, especially about Europe, it is “more nervous” about some European countries, he said, not naming specific countries.

Of the four major Italian political parties, none won a majority in the weekend’s election. Prime Minister Mario Monti, who favors austerity, performed poorly, and anti-austerity candidates advanced. Many pundits fear Italy will abandoned the economic reforms and austerity measures euro zone leaders want, which could lead to a return of the euro zone debt crisis with its fears of a euro zone break-up.

The Italian election results have been described as the “worst possible outcome,” noted Mark Hulbert, publisher of The Hulbert Financial Digest, in an article for MarketWatch.

But the euro will survive, he asserts. Bit by bit, Europeans are reaching fiscal and monetary compromises that give more authority to the European monetary union, he wrote, quoting John Dessauer, a former multinational banker based in Europe.

“At the end of the day,” Dessauer stressed, “the Italians won’t want to get out of the euro, and therefore will recognize that they have no choice but to accept a certain amount of austerity.”

As shown by exchange rates, currency markets, which have “some of the smartest minds in the world,” are not predicting the end of the euro, Dessauer told Hulbert.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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