MUMBAI (Reuters) – Global deal environment is picking up and there are a “few rays of sunshine” for the world economy, an Indian newspaper cited Henry Kravis, co-founder of buyout firm Kohlberg Kravis Roberts and Co [KKR.UL], as saying.
“We haven’t decided yet whether the economy has turned around but we’re seeing a few rays of sunshine,” the Mint quoted him as saying on Tuesday.
“They are starting to show up in the U.S. in particular and they are starting to show up here (India) a little bit, in China and a few other markets.”
The world’s worst economic crisis in 80 years had dealt a severe blow to deal making over the past one year.
“It’s bad, it’s global and it happened so fast. It’s like somebody shut the lights off around the world,” he said, referring to the economic crisis.
But deals were starting to happen again though it was unlikely mega deals, such as those in the 1980s and from 2004 to 2007, would come back, he said.
“Transactions up to $5-6 billion can still be done. Terms are going to be different,” Kravis was quoted as saying.
He said one of the biggest hurdles was a new U.S. accounting rule on valuing portfolios and assets.
“It would have been a lot easier if you did not have to (change the rule). So part of the problem is pricing and getting buyers and sellers lined up,” the paper quoted him as saying.
KKR saw 80 percent of its 48-firm portfolio marked down 41 percent as at end-December, even though 69 percent of the portfolio showed either increased or same earnings in 2008 versus 2007, he said.
“I believe there’s something wrong with how this system works,” Kravis said.
KKR, which has invested in Bharti Infratel, the tower network arm of top Indian telecoms firm Bharti Airtel (BRTI.BO), sees India as a place for growth capital and other things besides buyouts.
However KKR, which hired Citgroup’s (C.N) India head Sanjay Nayar a few months back, will not rush to do a deal in the country, he said. (Reporting by Narayanan Somasundaram; Editing by Ranjit Gangadharan)