The Treasury Select Committee on Private Equity meets again

…tomorrow. Sadly, in the am, meaning I’ll be (one would hope) sound asleep. But it ought to be entertaining. I posted about the last meeting of theirs, and Graeme Wearden of the Guardian did a splendid job of playing Osric.

Since then, much has happened – not least a bundle of moves by Private Equity in the UK, not to mention unions. And then the new PM made friends with them, to boot. Congress’ sabre-rattling will give the committee more courage still – as though they needed it.

Anyway. I look forward to reading all about it upon waking. The Blackstone performance should be good. They’ve been out in front criticising the plans by Congress to un-sweetheart their deals a little (it’s popularly called the Blackstone Tax bill, now).

Upon the morrow.

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2 comments so far

  1. Anonymous on

    While MPs are beating up private equity firms in London, the U.S. Congress is taking a more reflective approach.

    Yes, Senator Baucus, along with his center-right partner in crime Charles Grassley (Iowa-R), introduced the “Blackstone bill” that mandates PTPs (Publicly Traded Partnerships) be subject to corporate tax rates of 35%, but lets be clear: Congress is by no means rushing the bill to desk of the president.

    Why you ask? Because we (the private equity industry) are putting up a fight worthy of notice. Senators and congressman, even Charles Rangel, are beginning to understand the importance of PE firms to continued economic grow in a globalized economy where money can move at the speed of light.

    The industry created new lobbying groups and are addressing members of Congress daily. What more is that these firms donate hundreds of millions of dollars a year to politicians and their party’s PACs.

    My message: London needs to step it up! The PE industry that is. Inform your legislatures, use political influence, educate the public. If you (London) crumble on this issue, the U.S. will almost certainly follow.

  2. zooeygoethe on

    Well (thinking aloud. I mean in ASCII text) I am not London or England, although I take the sides you’re identifying (I’m certain not PE, either).

    I’m not inclined to agree with the importance of PE in a globalised economy. I wouldn’t say money can move at the speed of light, so much as is he begun to be moved at the speed of light by the likes of exactly your industry – and it serves your industry best of all. It’s a chicken-egg matter, really. As with currency speculation, Private Equity took the commonly-understood practise of home-equity-invested-in-shares to a new, highly profitable level. And as long as there’s a profit in something, people will do it. It’s worth remembering (certainly for me) that equity groups are the players, not the game.

    England’s system doesn’t quite work like the US’ lobby-fest. Case in point is Brown taking on PE guys in the Business Council of Britain, doing away with the middle man. Another of course is the cash for honours scandal. I think the industry has done pretty well in committee. Privately we’ll probably never know, as usual. I get the feeling, from what I read, that the heads of the groups are a little too competitive to truly co-operate in the face of this (that ‘enemy within’ episode was quite a crack in the armour). When you have 5 groups left, then you can make a Voltron (and I’m sure we’ll see that, by and by). With regards to taxation and openness, they’ll (you’ll?) defend together anything that they all do – it’s the differences that are worth trying to exploit.

    I suspect both countries will end up with similar legislation, clearing up the taxation issue and getting more openness. You have Dems who need to demonstrate that they can actually do anything, at all, while the House of Lords (and the party itself) usually comes through on things like this.

    A difference could come up post-legislation: I think the US (as a country) has more potential to get around pesky things like rules (forget not Bush’s theory that, since rich people managed to avoid taxes, it’s easier just to ignore the problem). That might dry up with Dems in charge. Particularly if the issue of government contracts to companies registered off-shore, etc. becomes at issue.

    Lobbying the people will be tricky. The differences in social welfarism still exist. As unpopular as buy-out-and-downsize is anywhere, doing it with debt, making billions with other people’s money, laying off workers for the purposes that they are, that sort of thing is unsurmountable in a hearts-and-minds context in Britain. The idea that industrialists are something that just happens to the rest of us (as is common in the US) is not the mood in unionised countries, Thatcher notwithstanding.

    We shall see, I suppose. They even seem equi-distant from legislation. Looking at Blackstone and KKR, it seems the declining access to debt is sending some firms public(ish) anyway, so the problem might just start to work itself out? I mean the industry has yet to even see its declining-profits-consolidation-Highlander period, yet, so we’re probably premature. As some groups take this route and some don’t, Parliament/Congress may yet begin to exploit some systematic differences that arise between Equity groups. It’s mostly speculative, at least on my part.


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