This is a serious f'n problem, and I'm glad it's finally being recognized.
When I see PE groups in China outbidding their Western counterparts by absurd multiples, it just reeks of ulterior motives.
EDIT: Spelling police got me.
When I see PE groups in China outbidding their Western counterparts by absurd multiples, it just reeks of ulterior motives.
EDIT: Spelling police got me.
And return less money to their fund than they would if they were acquiring companies domestically? Scratches head...
One reason that Ivy League endowments get consistently above-market returns is that everyone is comfortable taking their money.
EDIT: I sort of conflated foreign and kleptocrat money there, saying they both have to outbid preferred sources. Most foreign money is not from kleptocrats, of course.
There is no evidence for this being the cause of the price premium. There is substantial evidence that capital flight predicts which countries overpay for foreign assets. Russia and China are better explained by the capital flight hypothesis.
It could be both. We only have evidence for the supply hypothesis (i.e. capital flight). American companies requiring a higher price for foreign investors sounds plausible. But it's a guess for which we have zero evidence, particularly at a systemic level.
(Fixed demand and higher supply still lower prices.)
One test might be found in comparing pricing and flows for foreign investors around investment vectors companies have discretion around (e.g. private investment or M&A) to vectors with which they don't (e.g. public markets). You'd have to control with prices and flows from American investors in those markets, too, which makes it difficult.
you mean "reeks" (i.e. "smells", usually bad). It might wreak havoc on the U.S. economy, but it can only "reek" of ulterior motives.
It's all about 'rising tides lifting all boats' until there's a chance of someone else's boat being almost as high as ours. Then all of a sudden it's about the foreign threat, ulterior motives..