Olaf Kordes is managing director of Luxempart, which invests for the most part in the DACH region, plus France Romain Gamba

Olaf Kordes is managing director of Luxempart, which invests for the most part in the DACH region, plus France Romain Gamba

With a large amount of private equity money chasing a comparatively smaller number of deals, Olaf Kordes says PE houses that offer companies something different will beat the competition.

“Visibility is close to zero and we’re working with various business cases,” said Kordes. “That’s why it’s important to take a long-term view.”

Luxempart, which invests for the most part in the DACH region plus France, is able to take long-term investments, sometimes as a minority shareholder, thanks to investing from balance sheet. This puts it in a better position than the traditional PE model locked in its cycle of fundraising and divesting.

“We have 8-10 years in front of us, whereas [traditional] PE has a shorter investment horizon,” Kordes clarified.

And although interest rates are high, leverage in PE is lower than it was in the last crisis of 2008-2009. “Businesses taking a long-term view are capable of paying for [the higher interest rates],” said Kordes.

Meanwhile, uncertainty still brings big opportunities. “You can use the time to work on your portfolio companies,” he added.

For new deals, the necessary market shrinking at a time of high inflation has bestowed a Darwinian advantage on the best. “The deals that get done are top-notch assets.”