Barbarians fight to protect their name
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.