The trend of PE firms going public is positive...

IIPM PUBLICATION

If you were to put it crudely, their core competency is indeed ‘Buy, strip & flip’. But today, some Private Equity (PE) firms are arguably one of the most powerful forces shaping futures of companies. Within the last month itself, two PE buyouts took the markets by storm. The acquisition of TXU Corp. by KKR & Texas Pacific Group for $45 billion ranks as the largest leveraged buyout ever. And before that, Blackstone acquired Equity Office Properties for a whopping $39 billion.

According to researcher Private Equity Intelligence, investors poured a jaw dropping $432 billion into PE funds in 2006. Critics, however, vehemently oppose their practices. Steven VanBever, senior examiner, Supervision & Regulation, The Federal Reserve, states, “Some of the approach (by PE firms) to valuation has not been as clear as it could be.” Standard & Poor states that PE funds have led to significant decline of credit quality in European companies. Share of companies with junk rating rose to 17.2% in 2006 from a level of 1.2% in 2005.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative