Parting the veil

摘要

A few years ago, the financial pages were full of stories about companies buying one another. They still are, even though big intra-industry mergers are currently rare. Today's purchasers have half-familiar names such as Blackstone, Carlyle or Newbridge: these are all private-equity firms, which buy businesses, both new and mature, with a view to sprucing them up and eventually selling them again. This week, for instance, Blackstone agreed to pay EUD 3.1 billion ($3.8 billion) for Celanese, a German chemicals firm. The deal is the biggest involving a listed German company withdrawing from the stock exchange and going private. Since 1980, estimates Venture Economics, a research firm, more than $1 trillion has been poured into private-equity funds (see chart). Once the industry was clubby and opaque, the preserve of rich families and private endowments. To some it looks sinister, especially when private-equity firms have former politicians on their boards, presumably for their connections. In any case, these firms are facing growing pressure to be more open, and not just from conspiracy theorists. The main reason for this is the private-equity industry's own success. As it has grown, it has attracted a broader range of institutional investors, notably big public pension funds, lured by the prospect of decent profits not correlated with volatile stockmarket returns. Venture Economics reckons that pension-fund money accounts for two-thirds of current inflows. These institutions are themselves under growing pressure to reveal more information, and they need to know what their private-equity stakes are worth.