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CHICAGO � Lawyers who work with foreign investors looking to buy U.S. companies, major corporate stakes, real estate or other assets say they’re preparing for the surge in investments that began last year to keep up if not grow this year. Foreign buyers, especially Europeans, will be drawn to U.S. markets by the decline in competition from U.S. private equity funds that were buying up assets last year, but are finding it harder to get financing this year because of the U.S. credit crunch, the lawyers said. Some investors that found the competition too fierce last year will be entering the fray now, they said. So far, credit hasn’t dried up in European countries like it has in the U.S. DLA Piper partner Frederick Klein, who mainly works on real estate investments in the U.S., said he’s had German investment fund clients who were eager to buy in the U.S. in the past few years, but who were scared off by the “frothy prices” that came with competition from private equity funds. Now that some of those private equity funds have been sidelined by the lack of credit, his German funds are eager to jump in, he said. “Some of the German funds feel like they may have a little bit of an advantage this year,” said Klein, who also has a Japanese investor who is eager to make inroads in the U.S. Last year, foreign investors were principally attracted by cheap prices due to favorable currency exchange rates as the value of the U.S. dollar shrunk. Foreign investors last year injected $414 billion into U.S. assets, according to the research firm Thomson Financial. Sovereign wealth funds While foreign companies are investing, so are foreign individuals and governments, often referred to as sovereign wealth funds. For instance, Citigroup Inc. raised $12.5 billion from investors linked to government entities in Kuwait and Singapore this year and $7.5 billion from a United Arab Emirates entity last year. Neil Whoriskey, a partner at Cleary Gottlieb Steen & Hamilton in New York who has worked with Citigroup on the investments, said that he expects more of the sovereign wealth funds to make direct investments this year, skirting last year’s tendency to go through the stock markets or private equity funds. Whorisky said he has been encountering foreign investors in most of the bidding auctions for assets that he has been involved in this year. “It’s a buying opportunity for them,” said Janice Hamblin, an attorney in Chicago at Miller, Canfield, Paddock and Stone. Hamblin, who has been practicing in the area for about 20 years and is mainly focused on helping foreigners buy small to mid-sized companies in the U.S., said European interest is growing and she expects the Chinese to become more engaged in the market too. She said she has a pipeline of possible investments she’s working on, but declined to discuss any details. The only potential obstacle to the foreign investor momentum will be in the extent to which the squeeze on credit spreads throughout the world from the U.S., Hamblin said.

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