Speaking at the Super Return private equity conference in Dubai, Henry Kravis, co-founder of KKR, said he sees the problems in the banking sector beginning to stabilize. He also predicted consolidation in the banking industry over the course of the next year. Kravis is convinced that private equity can be a solution to the banking crisis, not just in terms of capital which so often mentioned, but also, and perhaps more importantly, in regards to strategy and operations (which as I’ve often pointed out is the true edge of private equity even after the easy credit is long gone). Kravis also suggested that PE firms should look at partnering with non-private equity groups when they choose to invest.
I think true stabilization in the banking and financial service sectors will only come when the various government initiatives actually get implemented. So far it’s been a lot of political talk and papers being signed. Most of the money has been dished out yet. Only when the cash tap begins to flow will we see how effective these “bailouts” are.