We Asked Investment Pros Their Best Ideas

Dec 29 2014 | 5:40am ET

Bernd Ondruch
Founding Partner, Astellon Capital

What was your best investment idea of 2014?

German residential real estate has been a signature trade of ours as we've seen demographic changes in German cities as well as corporate M&A that have lifted the entire residential real estate sector to all-time highs.

Investor capital has been flowing into German real estate from peripheral Europe as investors looked for ways to safely invest their cash. We've also seen a trend towards continued urbanization in Germany and the shortage of residential supply in German cities favored the companies we invested in.

Real estate as an asset class has become a major topic, and industry consolidation has unfolded over the past three years through portfolio transactions and corporate M&A. This year in particular, we've seen a number of very big deals in this sector, and we've been involved in a number of those.

What are you bullish on for 2015?

We see a lot of evidence that the M&A cycle will continue to broaden and deepen in Europe in 2015. Specifically, we expect to see a lot of consolidation in the chemical sector and the payment- processing sector.

We expect to see a lot of pan-European and trans-Atlantic transactions among chemical companies and we have identified a number of targets we believe will be subject to bid activity next year in Switzerland, the Netherlands and the UK.

Another sector that we're particularly bullish on is payment processing. In Europe, this sector is just starting to evolve. Payment processors will benefit from structural tailwinds, as there has been a shift from offline payments to online payments. Many of the processors that provide the plumbing in the background benefit from these increased volumes. We believe there are a few points on the value chain that are so mission-critical that they will be consolidated, and we're particularly bullish on the companies that provide the IT infrastructure to process payments.

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