Private equity debate to run out of steam
The nominations for this year's capital markets and corporate finance 'Deals of the Year' published in this issue highlight the level of depth and volume of the deals being transacted. And they also reveal the significant input private equity firms now play in the Irish corporate market.
The Irish mergers and acquisitions market is now dominated by private equity players, evidenced by their role in a number of the largest deals over the past year, including Babcock & Brown's acquisition of Eircom and the sale of Houghton Mifflin by a group of private equity firms.
However, despite the ongoing debate in Europe regarding the negative effects of private equity intervention, the debate has not yet started in Ireland.
In the UK, pressure is mounting on the Treasury to take some sort of action against the growth of private equity firms, with opposition coming from many quarters, including Paul Myners, author of the 'Myners Report', and the UK Trade Union Congress. The union's head, Brendan Barber, has called private equity funds 'casino capitalists' and 'amoral asset strippers' who 'can avoid the responsibilities that a public company has to live up to'. Moreover, in an attempt to quell the storm, Damian Buffini, head of Permira, Europe's biggest private equity firm, has agreed to meet with the unions to set out the case for his industry's role in corporate life.
However, the industry is also winning support amongst such influential industry players as Charlie McCreevy, who spoke recently in Dublin at the Finance Dublin Annual Conference. McCreevy has downplayed the recent commotion over private equity in Europe, and taking his usual non-interventionist stance on the issue, he has ruled out additional regulation of the industry in Europe.
Unlike the bad press private equity firms have garnered in other quarters, McCreevy has been fulsome in his praise of the industry, remarking that private equity funds have helped to keep publicly quoted companies on their toes, have created shareholder value and helped companies adapt to modern market conditions.
Employing his usual colourful language at a recent conference, he said, 'There is not room in the modern world for hush-puppy fund managers watching passively as complacent management teams erode shareholder value'.
McCreevy's stance on the issue has won support from industry players, including the European Venture Capital Association (EVCA), which declared that, 'numerous studies prove - again and again - that the private equity business model is good for the economy and particularly important in making European companies more competitive in an increasingly global business environment. But so few senior level politicians are prepared to say this in public'.
With McCreevy now behind the industry, and continuing economic prosperity, it is unlikely that this particular debate will reach our shores anytime soon. |
