Europe the 'Largest Emerging Market' in the World: Carlyle CEO

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David Rubenstein, chief executive of global private equity firm The Carlyle Group.

With billions of dollars' worth of distressed assets in its banks waiting to be snapped up by more intrepid investors, Europe is one of the "largest emerging markets" in the world, according to the chief executive of global private equity firm The Carlyle Group.

David Rubenstein told CNBC on Wednesday that, outside the U.S., the best markets to invest in were to be found in emerging markets such as China, Brazil, Peru, Chile, Nigeria…and Europe.

(Read More: Battle for Emerging Markets Heats Up)

"Europe, we think, has a lot of appeal. It's been beaten down so much that we think it's like the largest emerging market in the world because prices have been beaten down and we expect growth to occur there," he told CNBC in Davos where he is attending the World Economic Forum (WEF).

"There are many banks in Europe that will sell assets this year and next [year] and we think there are good opportunities to buy."

He said investors were likely to see really cheap prices for some banking assets.

"I hope these are fire-sale prices, they're probably not going to be that cheap. The banks can't sell everything they have on their books at the prices they would probably get for them, as that would cause them difficulties. But they will sell some assets and we think it's a good opportunity."

European banks have been shedding assets as they seek to shrink their balance sheets. The Carlyle Group, bought investment management firm TCW – albeit an American asset -from French bank Societe Generale in 2012.

"We got a very good price," Rubenstein told CNBC.

Europe Recovering?

The European Central Bank chief, Mario Draghi, said on Tuesday that "the darkest clouds over the euro zone have passed," adding that tensions within the euro zone had eased and the single currency had been protected by central bank measures.

"People are now pretty happy" with Europe's progress, Rubenstein told CNBC, as the euro seems stable and the borrowing costs of struggling countries such as Spain and Italy had declined after the ECB's proposed a sovereign bond-buying program, called Outright Monetary Transactions (OMT).

"I think the ECB had done a fantastic job and that Europe is in a reasonable state," he said, though he emphasized that any economic improvement was due to expectations for Europe being so low.

"The bar is so much lower. Expectations of what Europe would do have lowered so much that now, given where Europe is, it actually looks pretty good," Rubenstein said.

"[But] if you came from Mars and looked at Europe's financial situation you'd say "this is a problem" but given what the expectations are - that Europe won't grow very much - people are now pretty happy."