Brave new world for Super Return


COLOGNE, Germany -- Some of the biggest names in the private equity business descended on Germany on Tuesday for the three-day industry conference Super Return.

But with the aftershocks of last summer's subprime crisis still shaking the financial world, this year's conference seems more sober than super.

The effects of the credit crunch are hard to avoid. One of the main sponsors of the three-day conference, being held in Munich through Thursday, is German bank IKB, which is teetering on the brink of bankruptcy with some $17 billion in bad loans following last year's crisis.

Jon Moulton, a managing partner of U.K. equity group Alchemy Partners set the tone in his opening address Tuesday, saying that the PE industry is moving away from the boom era of mega-buyouts fueled by cheap credit to one of smaller deals for minority stakes in companies.

"The leveraged buyout market will not exist," Mouton said.

But PE companies still see plenty of opportunity in smaller cap investments, particularly in industries hard hit by the recent downturn.

A study published last week by analysts KPMG forecasts an uptick in midsize deals up to 400 million euros ($590 million) in the coming year.

Speaking at an expert panel Tuesday, Steven Puccinelli, head of European private equity at Investcorp, argued that companies with a large enough financial base will be able to weather the downturn.

But he added that managing a company post-acquisition, instead of focusing on selling off assets quickly, will become increasingly important in the future.

The PE industry also has some work to do on its media image.

Attendees on the first day of the Super Returns conference were greeted by chants and boos from protesters organized by union groups. The demonstrators held up pictures of locusts -- a reference to the term used by German deputy chancellor Franz Muntefering in 2005 to describe private equity firms and ever since a byword for the industry in Germany.