News

In the weeks that have passed since Philip J. Jennings challenged private equity firms at the World Economic Forum in Davos at the end of January, the sector has faced a barrage of criticism from global and national unions, politicians, the media, regulators and private equity insiders.



A UK Sunday Times article, on March 4th was headlined “Reform private equity or risk public rebellion” and observed “Boom or bust ? The writing is on the wall”, some of the industry’s big guns warn their fellow takeover tycoons after a chorus of calls for curbs and regulation. The article followed the conclusion of private equities annual get together in Frankfurt last week. The Sunday Times reported that ‘In recent weeks, the private equity industry has come under unprecedented attack… for its lack of transparency, pour corporate social responsibility and bumper pay packages.”

In looking at media reports from last week’s ,“Super Return”, as the event on the private equity was termed shows a sector that has been rattled and is beginning to have concerns about the severity of future financial storms.

Some examples :

“I think there is a general view, and it is increasingly understood by the private equity world that they do need greater transparency… My message to private equity is that coming forward with proposals for greater transparency in the way they operate would be in the interests of their industry and the UK economy more generally”. Ed Balls, UK Government City Minister.



Guy Hands, British Financier, claimed that the top ten large buyout firms risked becoming the “unacceptable and unaccountable face of capitalism” and had a fight on its hands to defend itself against critics. “Super Return” Conference Frankfurt.



“Institutions are choosing to move into a form of investment that provides little real diversification from equities over time; comes with higher risks because of leverage; has far less transparency than a portfolio of listed stocks – and for which the institution has to pay premium fees. Michael Gordon, Fidelity.



Investing in private equity is risky and should only be undertaken with enormous care, even by sophisticated investors. Martin Wolf, Financial Times



Private equity investors have become too big to hide. Martin Wolf, Financial Times



“We should act like a public industry. The funds are private but they are so large that we need to deal with the public, with labour unions, with environmental groups, as if they (private equity funds) are a public company. David Rubenstein, Carlyle Group, “Super Return”Conference Frankfurt.