Where's the growth? Euro zone still lacks investor appeal

Euro

LONG-TERM PERSPECTIVE

Davide Serra, a founder of hedge fund Algebris, is placing his bets on being long in 2013 on bank and insurance stocks, much shunned by investors over the past five years of crisis.

And some cash-rich players from Asia and the Gulf with a longer-term perspective have been actively looking for bargains in what remains one of the richest regions of the world.

These investors are shunning bonds and equities and rather looking to snap up quality companies at attractive prices.

"We see opportunities both in Europe and the United States. Despite the crisis these are the most developed, most trusted and most liquid markets of the world," said Scott Freidheim, Europe CEO of Investecorp, a manager of alternative assets for Gulf investors.

"We don't dismiss the headwinds that Europe still faces, but it creates opportunities," said Freidheim, who bought Spain's Esmolglass in the summer and is targeting other private companies with a strong exposure to export markets.

Even though many European companies are on average worth around the half of levels seen before the subprime crisis, some of these investors say the best buying opportunities may already be over.

"Opportunities are everywhere in Europe, but at the end of the day it has to be priced right," said Chen Feng, chairman of Hainan Airlines Group, which bought 48 percent of French airline Aigle Azur in October.

"If you can't agree on the price, the deal is not going to happen, no matter what the economic situation is like ... If somebody thinks that everything is fine now and wants to price higher than what the market can pay, then obviously there's going to be no deal."

So far then it's mainly the most risk-tolerant buyers who have bought into euro zone assets. For everyone else, there has to be a clearer sign that economic growth is returning before they open their wallets.

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