Super-rich private equity
stars rue 'lousy' reputation, say they are misunderstood
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[May 03, 2017]
By Lawrence Delevingne
HILLS, Calif. (Reuters) - Ultra-wealthy private equity managers lamented
their reputation as 'lousy' corporate profiteers at a plush Beverly
Hills hotel on Tuesday, arguing their value to society was greater than
the public realized.
Stephen Schwarzman, chief executive and co-founder of the Blackstone
Group, touted the fact that companies owned by his private equity
business employed about 600,000 people and had grown 50 percent faster,
on average, than the S&P 500 Index.
"The idea that you can do all that and have great success and be
perceived at best in a marginal way in terms of contribution to society,
you've got to really wonder whoís doing the PR," Schwarzman said during
a panel discussion at the Milken Institute Global Conference at the
Beverly Hilton hotel.
"People mistake us for financial people. I donít know exactly why," said
Schwarzman - worth some $12 billion, according to Forbes - drawing a
distinction between private equity investors which own businesses and
mere financiers. "If you had 600,000 employees, you might be a company.
A responsible company. And thatís what we are."
Private equity has been criticized by some for saddling companies with
debt only to sell their assets, cut jobs and take out profits. Private
equity executives are some of the wealthiest people on Wall Street,
deriving most of their income from fees paid by their fund clients,
including keeping a cut of investment gains when companies are sold or
go public. The founders of most of the biggest firms are billionaires.
Jonathan Sokoloff, managing partner of private equity firm Leonard Green
& Partners, chimed in with Schwarzman.
[to top of second column]
Stephen Schwarzman, Chairman, CEO and Co-Founder of Blackstone,
speaks during the Milken Institute Global Conference in Beverly
Hills, California, U.S., May 2, 2017. REUTERS/Lucy Nicholson
been able to deliver returns for 30 years dramatically in excess of the stock
market," said Sokoloff on the same panel. "Notwithstanding that, our industry
still has a lousy reputation, we are generally viewed negatively by most people
who donít understand us."
Sokoloff said the private equity industry employs hundreds of thousands of
people, has generally avoided scandal and performed well through the financial
crisis of 2008.
"We need some better PR and some help in how we market ourselves," Sokoloff said
Thomas Barrack, executive chairman of real estate and investment management firm
Colony NorthStar Inc, did not miss the chance to commiserate during the same
"People go ĎOh, youíre in PE, donít you just go in and buy companies and cut
costs and then pray them up and flip them?'" Barrack said. "I say 'No, weíve
never done that. We donít do that at all. We grow businesses. We create value.'"
(Reporting by Lawrence Delevingne; Editing by Carmel Crimmins and Bill Rigby)
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