From two very different European platforms, the message about private equity was the same: Calm down.
British Prime Minister Tony Blair refused to jump on the anti-p.e. bandwagon tooling around Europe, saying it is a boon to the economy, at the same time member of the British union GMB—affiliated with Blair’s Labour Party—picketed the Super Return private equity conference in Frankfurt, Germany.
There, Texas Pacific Group co-founder David Bonderman assured listeners that p.e. wasn’t that big a deal, in spite of the fact that his firm just helped engineer the largest leveraged buyout in history.
“Private equity is a rounding error in the capital markets,” he said. “We’re tiny.” But, he added, “there is no reason why private equity can’t be much more substantial than it is today.” At the same time, he sought to mollify the industry’s critics, which in Europe have sought restrictions on its activities on the continent. He credited p.e. with pushing down executive pay and claimed that p.e.-backed firms actually create more jobs, and cut fewer, than do companies without p.e. backing, arguing that p.e. firms are not the corporate raiders of popular imagination.
Bonderman blamed incessant media coverage for sullying private equity’s name, and joked, “the number of private equity publications is up five times, a sure sign of impending disaster.”
Back in London, Blair, at his monthly press conference, agreed that the doom and gloom prophecies surrounding p.e. is something of an exaggeration.
“It’s important that everyone behaves responsibly, but you’ve got to be very careful of these issues,” he said. “Otherwise, you end up in circumstances where concerns about maybe a minority of specific issues in specific circumstances end up tarring a whole sector, and I don’t think that would be fair at all.
Echoing his government’s statements about hedge funds—and surely riling the GMB members in Frankfurt—Blair said, “Britain is one of the number one places in the world for private equity, and I think the private equity market is a market that brings a lot of benefits to our economy.”