Saturday, July 16, 2011

Latest Missive from PECKER Council


The PECKER Council ran its latest defense of private equity underwriters (PEU's) via Dealbook.  PECKER stands for Private Equity Capital Knowledge Executed Responsibly.

The missive came from the CEO of New Mountain Capital.  He cited the ubiquitousness of PEU's.

Today, there are more than 1,800 American-based private equity firms that vary in size, geography and expertise, operate in all parts of the country and employ six million workers.
No wonder almost every ex-politician and public servant lands a PEU job.  But how many of those six million PEU workers make the ka-ching of a Tom Daschle, Bill Frist or Evan Bayh? 

The piece highlights a number of PEU talking points, one being greater returns for public pension funds, The author failed to mention The Carlyle Group's $681 million in capital calls to CalPERS in fall 2008.  Also, it cited a "long term historical shift away from leverage."  Carlyle Capital Corporation imploded in March 2008, due to being levered 39 to 1.  He didn't state the impact of cheap money or political influence on PEU growth.

The column effectively ends with don't take away preferred carried interest taxation, what many consider to be a long term "flaw in public policy.."  The PECKER Council thinks about one thing, money and how to get more.  The piece may help private equity improve its reputation or increase interest in Carlyle's looming IPO.  Then again, it may not.

Disclosure:  The real name of the trade group is Private Equity Growth Capital Council- PEGCC.  It initially rolls off the tongue, then turns into a gag reflex.  Many react to PEU's in such a fashion.

Update 7-18-11:  An ex-business journalist wrote me, saying "I'm not sure why all the PE guys think they're being vilified! No one ever talks about it.  They really should just keep their mouths shut because as far as I can tell they've got the press and the government on their side. I think the PEU dost protest too much!"  PECKERs.

Update 8-23-11:  PECKER/PEGCC canned their CEO and is looking for a new chief pecker. Evan Bayh, Chris Dodd, even Tom Davis come to mind as outstanding candidates.

Update 3-29-12:  Ex-Carlyle affiliate Petroplus declared insolvency, a rare move for oil refiners.  How did Carlyle's PEU moves put Petroplus in jeopardy, such that they delisted their stock from the Swiss exchange and a $150 million convertible bond?