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Wednesday, 20 June 2007 |
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Private equity is all well and good but there is something counter-intuitive when its chief proponents float on the public market. A case of poacher turned stoat?
Private equity investors tend to have all the charm of a stoat. They descend upon companies, take them out of public ownership, and eviscerate them. The bowels dragged toothily from the bodies of the companies involved are more often than not the human souls of the workforce.
With this blood-soaked tableau as a backdrop, it’s amusing to learn that Blackstone, one of the leaders in the chasing pack of PEIs, is twittering off into an IPO worth up to US$5bn. This not inconsiderable sum can be set against investments to date of more than US$32bn.
PEIs like Blackstone divide opinion. Workers in the target company are subject to downsizing on scales not seen since the 13th century when the Black Death was rampant. Many jobs are sub-contracted to parts of the world where the Black Death is still rampant. Well that’s a result.
The role of PEIs comes frequently under the scrutiny of political pygmies – most recently in the UK – yet it’s the PEIs who shift chunks of corporate equity, not the regulators or politicians. More often than not they take moribund companies and turn them into more lively ones.
But the putative Blackstone IPO looks strange. An investment vehicle whose reason for being is to take public companies into private ownership itself prepares for a public float. It’s a gentle form of schizophrenia.
The point at which public and private shareholders rub uncomfortably up against each other may occur when the minority shareholders in, say, Blackstone, start reading the riot act to a company like, say. Blackstone.
More likely, the people who will invest in Blackstone or other PEIs won’t care so long as the money trickles in. The blood of ex-employees and the layers of culture that encase so many telecom companies can be waived, scraped or hacked away,
Jim Chalmers
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