Private Equity still troubled by the ‘image’ thing
From the Financial Times: there is a list (the list was put together by the Economist’s Economics Intelligence Unit. Now, I don’t like the Economist, and the fact that the EIU has a stupid name and puts its stupid work behind a stupid pay-per-view wall does little to help my prejudice. Also, I really doubt they care).
This list is of Private Equity-friendly countries, based on 42 criteria from strength of the judicial system to political risk.
“After years of obscurity, private equity has been thrust into the limelight and it is likely to stay there,” said Martin Halusa, chief executive of Apax Partners, in a report ranking countries on how easy it is for private equity to operate there.
“Waning policy support in many European countries is already having a subtle impact on the rankings; if the backlash continues, it will surely have a more pronounced impact on the rankings in years to come in what is a global and highly mobile industry,” said Mr Halusa. The warning comes after buy-out titans appeared this week before a Commons committee investigating private equity’s privileged tax position.
While the “industry is in the pink” with new assets rising by 38 per cent last year and returns by the top 25 per cent of funds reaching 37.6 per cent, the report says “all is not well” for private equity in its biggest markets. “Public and political opinion in some countries has turned against private equity in recent times and the industry stands accused of secrecy, asset-stripping and profiteering,” it says.
Those are strong accusations. They must have been reading my blog. Or this blog. Or this blog. Or almost anything being written about them since Bear Stearns’ funds tanked (Calculated Risk, by the by, has a cool post up just now on Wells Fargo).
England is simultaneously the best market and the biggest challenge, it appears:
The UK is the most developed market with private equity raising funds equivalent to more than 2.5 per cent of its gross domestic product, well above the US and France, where funds raised are equivalent to about 0.5 per cent of GDP.
Yet Britain has been gripped by a wave of anti-private equity sentiment, sparked by controversial bids for household name companies such as the Alliance Boots pharmacies chain and the AA motor breakdown service.
“This political and media onslaught has certainly exposed a lack of preparedness and PR savvy,” said Mr Halusa. “Most crucially, the industry has not been adequately geared up to answer critics with robust data on its overall economic and social impact.”
I had a comment on a previous post by someone ‘in’ Private Equity, saying pretty much what this article identifies: that Private Equity in England (and, we may surmise, continental Europe) are doing a pretty poor job selling themselves. He (or she) recommended something better than trying to win over the public – aggressive lobbying to get MPs off their backs in the first place.
Me, I would really like to see this list. Having commented about American automakers are bigger/better Private Equity targets than Japanese automakers, based upon little to know actual deduction or economics, I’d like to see where Japan is ranked.