HIG Capital sees potential in European distress

By Tom Freke

LONDON (Reuters) - Europe's battered corporate sector is an opportunity for investors willing to inject new capital and help turn around struggling companies, HIG Capital's joint head of UK practice Matthias Allgaier said on Tuesday.

Many private equity firms are struggling in the downturn to support their portfolio companies, paving the way for distressed asset investors to step in.

"Most traditional private equity firms do not have the skill set to be able to turn around a company, it requires very different skills than when aiming for growth," Allgaier said.

Investment fund HIG Capital, which began operations in Florida in 1993, last year raised $3.5 billion for its affiliate fund Bayside Capital to invest in distressed securities.

About a third of this will be invested in Europe in the next three to five years, alongside HIG's 600 million euro European buyout fund, Allgaier said.

On Monday, HIG Capital and Bayside secured a stake in Netherlands-based VNU Media alongside private equity firm 3i (III.L), which previously owned a majority stake.

The pair injected 17.2 million euros of capital into the company as part of a wider restructuring of VNU's debt load.

"We anticipate completing many more such recapitalisations in the current difficult economic environment," said Allgaier, adding he is considering a number of similar investments before year end.