* Firm has relatively little invested in pricey Europe
* Tough IMF medicine could lead to lower valuations
By John McCrank
TORONTO, May 11 (Reuters) - Private equity firm Blackstone
Group LP
"We were not interested (in Europe) when prices were very high, growth was very low and a lot of people other than us had a lot of enthusiasm," CEO Stephen Schwarzman said in a speech to the Economic Club of Canada in Toronto.
But a $1 trillion emergency aid package to stabilize the euro and prevent the spread of a sovereign debt crisis in Europe may lead to changes that make deals more likely going forward, he said.
"For a lot of this money to be disbursed and so forth, it's basically under the aegis of IMF (International Monetary Fund) plans, which tend to be pretty strong medicine, and that strong medicine that may need to be taken by a variety of countries in the EU almost logically would inhibit growth in some way," Schwarzman said.
"As an investor in our asset classes, that is a potentially interesting thing ... What I have found in life is that when the environment changes and people recognize that there are issues, that valuations over time tend to drift down, which might make it more interesting for us."
Schwarzman said that he likes "China, India, and everything that touches them" for future growth.
He added that, overall, the prospects for the U.S. economy are "surprisingly good," with a "U" type recovery apparently shaping up.
IPO MARKET RESPONSIVE
The ability for private equity firms to carry off large
buyouts is returning. Blackstone, with two other private equity
firms, is in talks to buy Fidelity National Information
Services Inc
Blackstone, one of the biggest buyout companies in the world, with investments in Hilton hotels, Freescale semiconductors and SeaWorld theme parks, also has a number of companies in various stages of the initial public offering process. [ID:nLDE64A0M3]
For the second half of 2009 and the first quarter of 2010, it completed or has in process about 12 "realizations", when a company exits an investment by IPOs and subsequent secondary sales, dividend recapitalization or by a strategic sale.
The market for leveraged buyout-backed initial public offerings can be streaky, but right now the market is responsive, Schwarzman said.
IPOs from his firm have outperformed comparable company offerings by about 48 percent, he said.
He added that, absent the last two or three weeks, strategic sales have also been "pretty good."
"We've done a number of them," he said.
"In terms of dividend recaps, both the return of bank lending as well as the most active junk bond market in history in the first quarter of 2010 has made it more possible to do transactions of that type."
Blackstone reported higher than expected quarterly earnings in April as the value of its investments continued to rebound. [ID:nN22203487] (Reporting by John McCrank, additional reporting by Pav Jordan; editing by Rob Wilson)