Private markets 360 – Sienna IM: How private debt contributes to the reindustrialization of Europe
The relocation of production facilities and the acceleration of manufacturing processes are goals that everyone in Europe agrees on. Markus Schuwerack, Country Head of Sales for Germany & Austria at Sienna Investment Managers, explains in his latest commentary the key role that banks, private lenders, and private equity investors play in implementing these goals in an environment of limited budgets.
The myths of “lean management” and the “factory-less company” are outdated.
Their limits have been revealed by the dependence on far-flung supply chains, whose vulnerability has become clearly apparent in recent times. In addition, there have been too many losers: the loss of jobs in production and management has left deep gaps in many areas. Labour markets once shaped by millions of people have shrunk, economic ecosystems have collapsed and large parts of public infrastructure, especially in the healthcare sector, have been shut down. The negative consequences of certain extensive relocations are now being critically questioned. There is now broad consensus that reindustrialisation and the reshoring of production sites are necessary to ensure Europe’s long-term economic resilience.
Massive investment needs resulting from diverse challenges
Many companies are faced with sudden order growth and a rapid increase in production rates. In response to the diverse challenges of the energy transition, reindustrialisation, artificial intelligence as well as internal and external security, enormous short-term investment needs are emerging. The recent global upheavals have further exacerbated this issue and coincide with a period of significant budget constraints. Financing this transformation requires a stronger mobilisation of private capital.