Insight 2013: Southern Europe and deal flow

Firms operating in Southern Europe will likely be most concerned with their existing investments next year, says Trilantic’s founding partner Vittorio Pignatti.

Firms in Southern
Europe will be
concerned about
the performance
of their portfolio
Vittorio Pignatti

Firms operating in Southern Europe will be more concerned about tending to their existing portfolios rather than making new investments, according to Vittorio Pignatti, founding partner of Trilantic Capital Partners, and chairman of Trilantic Europe.

“The European banking system is paralysed by uncertainty over regulation and capital is not acting as a buffer to help companies deal with decreased consumer and government spending and higher taxation,” he said.

“Funds are currently concerned more by their many existing investments that are struggling than the few new investments they are going to make in 2013,” he said. “Private equity is truly happy when the economy is booming and the fund is fully invested. Then all one needs to think about is exits. Unfortunately it doesn't happen often and when it does, it doesn't last long.”  

2013 will also be the year when the discussion on what the problems of Europe are, and the policy tools that may work, will die down, he said. “The debate on whether the Germans were too efficient or the Southern countries too inefficient and who pays to fix the imbalance will probably end,” he said.

The recovery will be hampered by the grindingly slow political process in the region, he said.

“2013 will be a very difficult year as the implementation of monetary and fiscal policies and structural reforms will be in the hands of 25 parliaments who will act erratically and disappointingly slow. The multitude of political decision makers in Europe is staggering when compared with a country of roughly the same size like the US,” he said, adding that member states also will have to deal with regional issues within the countries themselves.