As the Department of Justice continues its investigation into club deals, the private equity industry is planning to fight back by forming a lobbying association, according to comments from The Carlyle Group's co-founder David Rubenstein.
While speaking to a Bloomberg reporter at Private Equity International's Emerging Markets Forum in London he divulged vague plans for Carlyle to spearhead an effort to establish a lobbying body to protect the interests of private equity firms. The primary goal of the group would be to fend off any plans to regulate the industry here in the U.S. and in other key markets — namely Europe, where Germany's Social Democratic Party chairman Franz Muentefering last year compared the industry to the biblical plague of locusts. More recently, Australia, which has become a prime playground for buyout firms, is turning an equally wary eye on the industry. Last week, National Australia Bank chief John Stewart said "everyone feels private equity is going to end in tears."
While Rubenstein remained tight lipped about what other firms were participating or how the group might operate, he does have a possible template in private equity's cousin venture capital, which already has a lobbying body in the form of the National Venture Capital Association.
Interestingly, during the Internet bubble of the late 1990s, no one suggested the venture capital industry should be regulated. Even in the aftermath when hundreds of venture capital financed IPOs collapsed, nary a word of regulating the industry to prevent it from happening again surfaced. Logic would dictate that the NVCA's presence prevented such talk from surfacing.
Alternatively, public sentiment may be friendlier toward venture capital, which could be characterized as nurturing, when compared with the buyout industry, which is characterized as barbarians, pirates, raiders and vultures; thereby explaining why there were no serious calls to regulate the venture industry. Of course, venture capitalists can thank that public perception to the NVCA. —Matthew Wurtzel
See story from Bloomberg via The Los Angeles Times
See related story about NAB chief John Stewart from The Sydney Morning Herald
See related story about Franz Muentefering from The Deal
See Club Deal Dealwatch
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