New York (HedgeCo.net) – “When large-scale hostile takeovers appeared in the 1980s, many voiced the opinion that they were driven by investor greed; the robber barons of Wall Street had returned to raid innocent corporations. Today, it is widely accepted that the takeovers of the 1980s had a beneficial effect on the corporate sector and that efficiency gains, rather than redistributions from stakeholders to shareholders, explain why they appeared.”
Bengt Holmstrom of MIT and the University of Chicago’s Steven Kaplan
2012

“Investors ranging from pension plans and charities to global insurance companies and university endowments have placed money with private-equity firms. Public and private pension funds represent 43% of all the money invested with leveraged buyout firms in 2010, the most-recent year tracked by the Private Equity Growth Capital Council. Foundations represented 12% of the money invested. What is the appeal? For one, the returns. While stocks have spent the past decade treading water, and bond yields are near record lows, private-equity firms on the whole have scored gains for their customers.”
Gregory Zuckerman and Michael Corkery, The Wall Street Journal
January 12, 2012

“From the standpoint of our business, being owned by [private equity firm] Blackstone’s the best thing that ever happened to Hilton. Hilton was a good company that had the potential to be a great company and Blackstone has unleashed the ability for us to do that by helping us by investing significantly in the business and being an incredible partner in kind of setting the strategic direction of the business… We have completely transformed Hilton Worldwide and as I said, as a result of it have become the fastest growing of the major global brands, adding new rooms to the system of almost 30% over the last four years. Blackstone has been at the table with us, a great partner with us, has invested $6.5 billion in the business and has really put us in the position where were growing, as I describes, at a much faster pace, and in fact, creating a lot of jobs. If we look at the job growth that has come out of our entire enterprise over the last four years since Blackstone acquired the business, around the world we have added net over 70,000 jobs while we’ve been owned by Blackstone…It’s been very positive.”
Christopher Nassetta, Hilton Worldwide President and CEO
January 19, 2012

“On average, private-equity firms make companies more productive and, in so doing, have delivered strong returns to their customers. At the same time, PE firms don’t have much of an effect on net employment one way or the other… When appropriate, PE firms invest in and expand their businesses and employment. And the firms make these cuts and investments not for their own sake, but to deliver results for their customers.”
Steven N. Kaplan, University of Chicago Booth School of Business
December 14, 2011

“What is indisputable is that private equity needs public pensions and the public now needs private equity. All of America needs private equity to thrive.”
Brett Joshpe, Investor’s Business Daily
January 19, 2012

“Indeed, as “private” as private equity may sound, the beneficiaries are often the public.”
Andrew Ross Sorkin, The New York Times
January 16, 2012

“And the point of private equity is to spot opportunities to make a profit. But how do they make a profit? They see companies that are underperforming, that could be made more efficient, that perhaps could go into new markets, and what they try to do is make money by making those companies more profitable. And the real home-run ball is not just taking management fees and paying yourself dividends, but also building an asset you can then sell to someone else.”
James Freeman, Assistant Editorial Page Editor of The Wall Street Journal
January 16, 2012

“It is impossible to determine exactly the overall effect private equity has on American workers and domestic industry (though studies have tried). But Steel Dynamics offers a particularly positive case; its courageous origins and clever management have allowed it to compete with foreign manufacturers in what most considered an industry for which the die had been cast and America had lost. For every tragic story of a company that fails at the expense of its workers and investors, there are stupendous successes such as that of Steel Dynamics, and they would not happen without the capital and expertise of firms such as Bain.”
Patrick Brennan, National Review Online
January 16, 2012

“Likewise, the attacks on private equity seem over the top. Private equity firms like Bain Capital, where Romney worked, aren’t about destroying companies and picking over the carcasses. Rather, the aim is to acquire poorly managed companies, make them more efficient (sometimes by firing people but often by rejiggering the business model) and then resell them at a profit. That’s the merciless, rugged nature of capitalism.”
Nicholas Kristof, The New York Times
January 19, 2012

“Private equity investing has been good for the [public pension] funds, and for California taxpayers. [Calpensions.com’s Ed] Mendel notes that the year over year return at Calpers from private equity investments was nearly 29 percent, and the average over 10 years was a robust 8.9 percent, or far above what the funds have been earning in the public stock markets.”
Steve Malanga, Public Sector Inc.
January 17, 2012

Editing by Alex Akesson
For HedgeCo.net
alex@hedgeco.net
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