Wednesday, October 16, 2013

PEU Mavens Silent on Default

Fortune noticed the silence from private equity underwriter (PEU) legends on the prospect of a U.S. debt default. 

As the debt ceiling and government shutdown talks stalled yesterday, I reached out to several top private equity executives for their thoughts on what would (or wouldn't) happen if there was no deal by Thursday. Did they believe it would be catastrophic? Did they believe continued implementation of Obamacare would be worse? What were they telling their portfolio company CEOs?

No comment.

That's what I heard from representatives for people like Leon Black of Apollo Global Management (APO), Henry Kravis of Kohlberg Kravis Roberts & Co. (KKR), David Rubenstein of The Carlyle Group (CG) and Stephen Schwarzman of the Blackstone Group (BX).
PEU's like market dislocation.  Congress and the White House could be serving their PEU backers by delivering chaos.  Any comments by PEU legends would be explored deeply in hindsight and might reveal the bets each made in the debt default run up.

Update 10-19-13:  The Red and Blue Teams came together on a short term package to keep government operating until after the first of the year.  Oddly, the business community wants Congress to commit to no more government shutdowns or debt defaults.  The meme is businesses want predictability so customers will let lose of hoarded cash.  PEU mavens want lower taxes all around and wish to hold onto PEU preferred carried interest taxation.  Congress usually delivers for their funders.

Update 10-28-13:  Carlyle co-founder David Rubenstein weighed in after the fact.