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Private equity bosses reveal the hotspots of 2016

Institutional investors such as pension funds, sovereign wealth funds and universities are looking to increase their allocations to the likes of private equity to boost longer-term returns that are not so much at the mercy of public markets, industry chiefs have told CNBC.

Mergers and Acquisitions
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Alternative investments, such as private equity and real assets including property, precious metals and oil, have become increasingly attractive for investors looking to shield themselves from the volatile moves seen in financial markets.

Here at the SuperReturn conference in Berlin, one of the largest private equity events in the calendar, CNBC asks chief executives of some of the largest firms to reveal how they are investing for the year ahead.

Healthcare

"Private equity normally thrives in periods of enormous volatility and I think we are likely to continue in that trend over the course of this year," the chief executive of $20 billion Clayton, Dubilier & Rice, Donald Gogel, told CNBC.

"Well, I would say in energy it is still too early, no one is ready to predict $50-$60 oil coming back anytime soon. Across the board there are opportunities in almost any industry. There have been major corrections in healthcare for example which is 16-17 percent of the U.S. economy and a very attractive space in the long term," he said.


Avoid cyclicals

"In 2009,(as a result of the financial crisis) we had an economy that was running on essential services only. The only things that were happening were the things that had to happen. That was a great test from our perspective of what kind of businesses to buy," said co-founder and co-chairman of $50 billion CVC Capital Partners, Steve Koltes.

"Don't buy cyclicals. Any business that went through that cycle (after the financial crisis) badly, we would be worried about now," he said.

Banks

"I think you have seen a major retrenchment from the banks, both in the U.S. and here in Europe credit is a little bit more scarce, companies are starving for capital in order to meet their corporate objectives and there is companies like us in the alternatives space that are out there, trying to fill that void," Co-President of Ares Capital Corporation, Michael Smith who oversees over $90 billion in assets.

"Volatility in capital market has created a lot of opportunity, both in liquid securities, in bonds and bank loans but also private lending – which is one of our strong core products. We are one of the largest bank lenders in both Europe and the U.S., so we think that given the bank regulatory environment and the volatility in the banking environment, there is a lot of opportunity in that sector," he said.