Europe lenders primed for 50 bln euro LBO: banker

By Jeffrey Goldfarb

LONDON (Reuters) - European credit markets are prepared to finance a leveraged buyout of at least 50 billion euros ($67.1 billion) despite other, mounting hurdles for private equity, a top banker at one of the world's biggest lenders said.

"For the right industry, the right asset ... and the right story, you can certainly get north of 50 billion euros," Hamish Buckland, co-head of leveraged finance for JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research, Stock Buzz) in Europe, told the Reuters Hedge Fund and Private Equity Summit on Wednesday.

"Can you get up towards 100 billion? Probably not yet," he added.

Deals of such a size are most likely in the media and consumer goods sectors, Buckland said, where businesses are stable and the cashflows reliable.

But the swelling piles of available cash for deals come at a time when European buyout firms have been struggling to agree larger deals, including the $20 billion acquisition of UK supermarket chain J. Sainsbury (SBRY.L: Quote, Profile, Research, Stock Buzz).

Meanwhile, in the United States, the deals keep getting bigger.

Just weeks after Blackstone Group BG.UL agreed the $23 billion takeover of Equity Office Properties Trust earlier this year, Kohlberg Kravis Roberts & Co. KKR.UL and Texas Pacific Group TPG.UL announced plans to buy Texas utility TXU Corp. for $32 billion, or $44 billion when including assumed debt.

Part of the problem for buyouts in Europe has been a growing backlash in recent months by unions and some politicians against the private equity model and its effect on jobs.

Buckland said such criticism could prove a larger obstacle for private equity firms.

"In the past, it was only the shareholders and whether they accepted the bid or not that was your biggest concern," he said. "As you deal with unions and with household names, there's clearly going to be a political aspect to a number of these transactions.

Buckland also joined the growing chorus suggesting private equity will need to improve its communications skills, especially as its becomes an increasingly powerful force in capital markets and deal sizes swell.

"With the size of deals that could potentially get done, it is becoming a choice for almost any company if they want to live in the public domain or the private market," he said.

"With that is going to come much more responsibility and acceptance that they have a higher profile that is going to require better communications with a lot of different constituents and better information flow."