As they strive to diversify, private banking clients are becoming increasingly interested in companies outside their home region. At the same time, European investors, traditionally among the most conservative, are demanding private equity products. That is a boon for U.S. banks already established in the business. Several major European banks offer no private equity investments to even their highest net worth clients. For these reasons, Citibank recently launched a multi-manager private equity fund run by two managers in the United States, two in Europe and one in the emerging markets.
Clients can mix and match their investments as they like.
The fund, like other private equity vehicles, should take two or three years to become fully invested, during which time Mr. Sharaff hopes to take advantage of a ''wonderful environment of depressed prices.'' Private equity investors around the globe are identifying Europe as the most promising region. Average annual returns on private equity have trailed those in the United States at 19.8 percent a year since 1980 but have exceeded the 14.2 percent return generated by local stock market investments over the same period, according to the Independence International Associates European Large Stock Index. The investors are betting that that gap may be about to widen as share growth declines and more families seek to expand their businesses. But there is still plenty of opportunity in the United States, particularly as valuations deteriorate, private equity bankers said. Asian investors, still reeling from recent events in their home markets, are concentrating on U.S. and European private equity deals, bankers said, although the incredibly low valuations of Asian companies have lately peaked some interest.