Blackstone Opens Europe Spigot As Distressed Deals Surge

They have massively underperformed for three or four years because of economic activity in Europe, political uncertainty, etc. The catch-up could take a few years,” said Emmanuel Cau, equity strategist at JPMorgan. Top weights in the MSCI Europe Value Index include bank HSBC , and energy giants BP, Royal Dutch Shell and Total. While the STOXX Europe 600 trades at 12.6 times next year’s expected earnings, according to StarMine, HSBC trades at 10.4 times, BP at 7.7 times, with Shell and Total both at 8.2 times. The amount of money invested in European large-cap value equities was 24 billion euros ($32.49 billion) by the end of August, half as much as five years ago, Morningstar data shows. “The common theme is catch-up by lagging assets. That’s a late-cycle theme,” said Christopher Potts, head of economics and strategy at Cheuvreux. “We’re not going to do it in six months. If you’re talking about the recovery of value in Europe, it’s a five-year idea. It took five years to kill that view and it’s going to take years for it to come back.” In 2011, the only other time in the past decade when the price/earnings gap between growth and value was as wide as it is now, the broad market retreat started around three months after that gap began to close. That could be an indicator of when the broader market rally may run out of steam this time although not necessarily. In 2000 the gap between growth and value stocks was narrow yet the overall market downturn did not begin until around five months after the gap began to close. In the past five years the MSCI Europe Value Index has underperformed growth by nearly a quarter, in the run-up to the 2000 market peak, the gap between the two was less than 5 percentage points.

Multi Restructuring Since last year, Blackstone has teamed with Canadas biggest pension-fund manager to buy 640 million euros in nominal value of margin loans backed by a 12 percent stake in Gecina SA, Frances third-largest real estate investment trust. It also bought almost all of 900 million euros in face value of debt owed by Gouda, Netherlands-based Multi Corp., a shopping-mall developer that said in March it couldnt meet interest payments. Blackstone last month completed a restructuring that gave it close to full ownership of Multi, said a person with knowledge of the matter who asked not to be identified because the deal is private. Jonathan Gray , who heads the firms real estate unit, said Gecina and Multi were the 2009 funds biggest investments. He declined to specify how much Blackstone spent. In Europe, distressed is all weve been buying, Gray said. Rescue Financing Blackstones GSO credit unit has made loans to cash-constrained companies as banks pulled back. It injected $1.7 billion in six European companies over the past two years, including EMI Music Group Ltd., U.K. homebuilder Miller Group Ltd. and Spanish cement maker Cementos Portland Valderrivas SA. The unit plans to funnel $1.5 billion to $2.5 billion of a $5 billion global fund it completed raising last month into restructurings and bailouts of European companies that have violated the terms of their loans or have maturing debt they cant repay, according to GSO Co-Founder Bennett Goodman . About a third to a half of our current backlog of direct-lending deals is European, up from about 20 percent to 25 percent a year ago, Goodman said. KKR & Co., Oaktree Capital Group LLC (OAK) , Oak Hill Advisors and Colony Capital LLC are among other private-equity firms doing rescue financings.

Opinion: Europe must be open to refugees fleeing persecution

The figures are damning and shameful. Too many people are dying in their attempts to reach safety in Europe and much more needs to be done to address the root causes of why people risk their lives in this way. One thing is clear — this latest incident is an appalling reminder of what happens when people escaping persecution are denied access to safety at the EU’s frontiers. While we don’t know the personal circumstances of everyone on board this particular boat, we do know that the majority were from Somalia and Eritrea, two of the top 10 sources of refugees in the world, according to the UNHCR. Both are countries with well documented human rights abuses. Dozens dead in Italian boat accident Given this, it’s reasonable to believe that a number of people on board were refugees, fleeing persecution and seeking safety in Europe where there are substantial and settled Somali and Eritrean communities. Yet there’s been considerable head scratching in the media about why people would put themselves at such risk. Why would you get on an overcrowded, potentially unseaworthy vessel and risk your life to make it to Lampedusa? For refugees, the answer is simple — what they’re leaving behind is much, much worse. Somalia and Eritrea’s human rights abuses are well documented. Sexual violence and torture are commonplace. For refugees, staying at home — or ‘going back to where they came from’ — is not an option. Difficult though it may be for us to comprehend, for refugees, paying smugglers and boarding these boats is a rational decision. The problem is compounded by the lack of safe, legal routes into Europe.