Romney turns spotlight back on private equity

British buy-out sector fears it will again become the bête noire as US presidential race hots up
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The Independent Online

The British private equity industry is bracing itself for a wave of criticism and renewed scrutiny as Mitt Romney closes in on the Republican nomination for the US presidency.

Mr Romney, below, made his vast fortune as co-founder and head of Boston-based turnaround specialist Bain Capital in the Eighties and Nineties. This attracted much media attention when he stood for the nomination in 2008, a time that private equity was far more under attack for its perceived job-cutting image than it is today.

Since then there has been the Lehman Brothers collapse and the Royal Bank of Scotland and Lloyds bailouts, giving banks the mantle of public enemy No 1. But, Mr Romney has been attacked by nomination rivals Rick Santorum and Newt Gingrich over his pay and job losses at companies that Bain bought during his leadership. Despite this, Mr Romney remains the overwhelming favourite to win the nomination and take on President Barack Obama in November.

Private equity insiders who remember the damaging criticisms they suffered at the hands of the Treasury Select Committee and trade unions in 2007 are worried these could resurface when Mr Romney is thrust into the international media glare of the final run-off.

The committee effectively accused the industry of being secretive and the GMB union took a camel to the church of Permira boss Damon Buffini, none-too-subtly hinting that it would be easier for it to pass through the eye of a needle than for him to get to heaven.

A spokesman for the British Venture Capital and Private Equity Association (BVCA) said: "The private equity sector in UK is well aware of the intensity of interest in Mitt Romney's business background and accepts that the attention will last until the end of the year should he be confirmed as the Republican nominee."

A private equity source bemoaned that there was "nothing the industry could do" if and when the media and public revisited the asset-stripping argument that so hurt its reputation. A second figure said that "another backlash against the industry is inevitable".

Private equity has been subject to a number of domestic and EU regulatory changes in recent years as its opponents looked to curb the fortunes that buyout barons made from debt-fuelled buyouts.

Among Mr Romney's purchases was office supply chain Staples, where he was on the board for nearly 15 years and saw it grow from one store to a huge multinational. Today Bain has more than $60bn (£38bn) of assets under management.

Bain's UK investments include food distributor Brakes Group in 2007 and payment processor WorldPay in 2010. Former CBI president Dame Helen Alexander is a senior adviser.

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