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Europe set for financial M&A pick-up, investor says

By Lionel Laurent and Matthias Blamont

PARIS (Reuters) - Financial dealmaking will pick up in Europe as slow growth and tougher regulation prompts banks to try to slim down and boost profits, the co-founder of private equity firm BlackFin said on Wednesday.

Paris-based BlackFin has built up a portfolio of niche financial businesses across Europe since launching a 220-million-euro (183 million pounds) fund in 2011.

It expects to make more acquisitions of up to 100 million euros each and is eyeing Spain, Germany and Central Europe, Paul Mizrahi told Reuters in a telephone interview.

BlackFin is part-owner of brokerage Kepler Capital Markets, which recently struck a deal to buy French bank Credit Agricole's (PAR:ACA) broker Cheuvreux.

The firm sees more buying opportunities in asset management, insurance and equities brokerage and may launch a new fund within the next year or two, Mizrahi said.

While BlackFin focuses on small niche investments, there is increasingly deep-pocketed competition for European banking assets in general. Carlyle Group, Warburg Pincus and Apollo Global Management have all focused on European financials in recent years with varying degrees of success.

"This is a pretty ripe market for investment," Mizrahi said. "We are seeing an increase in the number of asset sales, either by insurers or banks, of subsidiaries that are no longer seen as strategic ... It's a big opportunity."

European banks have been under pressure since the 2008 financial crisis to sell assets to meet tougher post-crisis capital requirements. However, depressed valuations and the euro zone's troubles have deterred major cross-border deals.

"In asset management, whether in France or Germany, we once saw banks actively buying boutique firms ... some were successful but others were left by the wayside," said Mizrahi. "We are really interested in this sector."

BlackFin already owns wealth management advisory firm Cyrus Conseil.

There are also more bolt-on acquisitions to find for businesses like Kepler, which has struck deals with Italy's Unicredit (MIL:UCG) as well as Credit Agricole; the next step could be acquiring a broker in Spain, said Mizrahi, who also cited Germany as another market where deals could be made.

"We are seeing more and more offers from Germany," he said, noting that the country's banks were "not ahead of the pack" in terms of balance-sheet clean-up.

Mizrahi says BlackFin's portfolio, which includes French paycard provider Moneo, Italian insurance website Chiarezza and German online finance marketplace Finanzen, was overall bought relatively cheaply at around 6 to 7 times earnings before interest, tax, depreciation and amortization (EBITDA).

"We are already getting offers for a few of our holdings," he said. "In a world where there is zero growth, where the overall size of the market is not increasing, you must invest in the small players."

(Editing by Ruth Pitchford)