Wilbur L. Ross Discusses Distressed Investing
Investing in the distressed Bank of Ireland was a strategic gamble, said Wilbur L. Ross YC '59, CEO and chairman of WL Ross & Co. But, he said, he believes that gamble will pay off in 2014, when he predicts the bank will once again become profitable.
Ross shared his views on distressed investing and the European financial landscape during a Yale SOM Leaders Forum talk on January 29. The event marked the first time a Yale SOM talk was shared in real time with another member school in the Global Network for Advanced Management: students at the London School of Economics and Political Science watched the talk live.
Since 2000, Ross has led WL Ross & Co., a private equity company specializing in distressed and bankrupt companies. Speaking to a capacity crowd at Yale SOM, he discussed the criteria his firm used in choosing to invest in the Bank of Ireland rather than institutions in other financially distressed European countries, including Greece, Portugal, Spain, and Italy.
Among its strengths, Ireland presented a stable political environment, a willingness to abide by stringent European austerity measures, a lack of social unrest, a well-educated workforce, and the lowest tax rates in Europe, Ross said. It was also not afflicted by the chronic, business-averse societal problems that are present in the "Club Med countries," he said.
Looking forward, Ross also commented on U.S. sectors that his firm is studying for future investment opportunities. Among them is healthcare, a field Ross said he's been watching since President Obama's healthcare overhaul debuted. "You can't change any system that radically and not create winners and losers," Ross said, adding that the challenge is determining which companies will end up in which categories.
Above all, Ross stressed the rigorous analysis and research that precede any distressed investment. "These are not impulse purchases," he said.