Investing in Private Equity Opportunities

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Oct. 23 (Bloomberg) -- Citi Private Bank Global Head of Managed Investments David Bailin discusses investing for the ultra wealthy with Deirdre Bolton on Bloomberg Television's "Money Moves." (Source: Bloomberg)


What is the tone?

More risk on.

I think we have been through four major disasters.

Everything from syria to the fed and the government shutdown.

Now people are seeing their way of looking at 2014. what they are seeing is a market where, even though rates have stepped back and bonds have done better, they are worried about growth and what that means.

They believe there will be higher rates.

What we see now is more interested in alternatives as they look at growth rates for 2014. rates are going higher because a lot of people are saying janet yellen is going to continue the same path as ben bernanke.

That is right.

It is only a matter of time before the fed becomes competent tapering can take place.

We're talking about tapering.

Not ending.

We thing that is a signal of strength for the american economy.

It is a question of when.

If the fed begins to taper, and we begin to normalize, ons are going to underperform.

We are expecting that.

People are going to make a happened -- have to make a decision.

There is your role, which is a big one, helping these individuals craft a strategy.

How are you helping, where you suggesting?

We are in the process of doing or planning.

If you think about where we're looking at, what somebody could be, i think there's going to be a dm versus em theme.

Valuation's in emerging markets are going to be attractive herein we are interested in risk in what they are actually taking on.

Take a look at the u.s. market right now.

If we look at the typical equity, your finding the relative valuation that is very low.

We are going to be looking for stocks that are bigger earners, where we can see pe expansion.

And in alternatives, if fixed income is unattractive, are people going to take a look at the trade off again?

We except more liquidity for a much higher return.

We think that is going to be a big play.

So where are some of these more ill liquid opportunities, if stocks are overvalued you are going to get yellow -- no yield from the bond market for the next few months.

Where are you suggesting?

I do not think stocks are overvalued.

We have put that on the record.

I do think when you take a look at opportunities in private equity.

We can highlight two of those.

Nonperforming loans.

As banks recapitalize and they have to meet their balsa requirements they're going to shed pools of small loans.

Those will provide an excellent opportunities for investors.

We are talking about doing that in 2014. and then in the energy sector in the united states, a similar play is available.

It is a radical change.

Not in investing in actual energy but pipelines, transportation, and other knock on effects like manufacturers.

All of these areas in the u.s. can be very attractive.

What do think of mlp's? there's a lot of support for this class.

The question, when you buy an mlp, you are buying in interest- rate sensitive security.

Those that we like or those that have growth prospects.

The volume and rates are going to go up, allowing our clients to get increased yields.

But we generally like that.

He mentioned opportunities in europe with banks, finally shedding assets.

You pointed to energy in the u.s. one other sector that has been hot, when we talk about blackstone, they are making money in real estate.

Is it too late for anyone else to make money in real estate?

It is not too late but it is difficult.

We were looking for certain opportunities.

The ones we like rain our development oriented where we can bring equity to development transactions.

We have some done -- we have done some in new york and california.

We also think there's going to be a look at secondary markets in the united states.

Some of them have much better valuations than the primary ones.

We are looking.

And we're looking at the purchase of distressed assets with real estate as collateral in europe and elsewhere in the world.

Far harder to deliver those returns, but we think there are some opportunities in the sector.

Always great to see you, thanks for sharing your thoughts and your time.

David bailin joining me, head of

This text has been automatically generated. It may not be 100% accurate.


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