Sunday, August 22, 2010

Everywhere, Anywhere: PEU's

Just as the fish doesn't know it's in water, America is yet to realize the pervasiveness of private equity influence.

How ubiquitous are private equity underwriters (PEU's)? Turn over an ex-politician rock and odds are you'll find a PEU. ShoreBank, the world's best known community development bank, had microlending in 11 countries before it failed. It also had ShoreCap International, a private equity division expecting 12-15% returns per annum. Who knew microlending offered that kind of ka-ching?

Graduating MBA's migrated to PEU's in droves. Dow Jones reported:

Figures from Harvard show that 11% of its most recent crop of MBA graduates went to work in private equity, the lowest percentage since 2005 and down from a peak for the decade of 17% in 2008.
Some MBA's have famous last names, Frist, Axelrod. When the Blues are in as deep as the Reds, PEU's are ubiquitous. Greed infects corporate board rooms as well as our hallowed halls of government.

Update 10-26-10  Carlyle Group co-founder David Rubenstein spoke to this at SuperReturn Middle East.  He said, "The industry has gone mainstream. Buyout firms and their investors have deepened relations with government, media, consumer and environmental groups, rather than focusing exclusively on returns."