Bar­bar­ians fight to pro­tect their name

Finweek English Edition - - Creating wealth money matters -

TO NEU­TRALISE THE GROW­ING sus­pi­cion of the ac­tiv­i­ties of private eq­uity groups (of­ten re­ferred to as “bar­bar­ians at the gate”), a lobby has just been formed in the US to try to con­vince lead­ing politi­cians that it’s an in­dus­try that con­trib­utes to eco­nomic growth, be­cause it makes com­pa­nies more ef­fi­cient.

The head of the group is Douglas Lowen­stein, who has many years’ ex­pe­ri­ence of how Wash­ing­ton op­er­ates. He says the prob­lem isn’t that private eq­uity buy­outs are bad for the fi­nan­cial sys­tem, but that so many peo­ple don’t re­alise what it’s all about.

It’s not only in the US that peo­ple are sus­pi­cious. In Europe, some in­flu­en­tial busi­ness­men and politi­cians are al­most hos­tile. That’s partly be­cause cap­i­tal-flush US groups are try­ing to take over ma­jor Euro­pean com­pa­nies.

Mean­while Stan­dard & Poor has an­nounced that the private eq­uity in­dus­try has reached such pro­por­tions that it has de­vel­oped an in­dex to mon­i­tor the sec­tor’s per­for­mance. The in­dex is listed and rep­re­sents the 25 most liq­uid private eq­uity groups, es­pe­cially in the US, Europe and Asia. It’s the sec­ond in­dex of its kind. The Dow Jones Private Eq­uity In­dex (Privex), which also cov­ers 25 com­pa­nies, was launched in Oc­to­ber. The in­dus­try is ex­pected to reach new record lev­els this year, rais­ing cap­i­tal worth US$700bn.

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