The Blackstone Group's private-equity chief does not like what he's seeing in his industry these days.
"Right now in Europe, something like 75% of deals above US$500 million in enterprise value are sponsors selling to each other," Joseph Baratta said at a Bloomberg summit in London. "That's not a sign of health in our market."
Secondary buyouts have totaled US$29.9 billion in Western Europe this year, compared to US$27.6 billion in primary buyouts, according to Allen & Overy.
"I'm rooting for a large-scale resumption of corporate M&A because that's the lifeblood of our business in private equity," Baratta said. "Large corporate mergers result in non-core asset sales or some corporations who don't have ready access to capital need our help. That's a healthy functioning private-equity market."
"The way the private-equity market in Europe is operating is problematic," Baratta continued. "There is a lot of capital, there is no corporate M&A of any substance, there is very little primary private-equity deal flow. And these is this generic belief that Europe is out of favor."
Baratta said bluntly that p.e. was not the place to be in Europe right now.
"Europe, in certain asset classes, presents a once-in-a-generation opportunity," he said. "Unfortunately, it's not in private equity."