Bonderman says critics’ concerns exaggerated(2)

TPG’s co founder David Bonderman told rivals at a conference private equity was still small compared to the public markets and it could grow much bigger.

David Bonderman, co-founder of US buyout firm Texas Pacific Group, has reportedly played down the furore engulfing the industry in Europe at a conference today.

He said the level of interest in private equity was disproportionate and the industry remained tiny compared to the public marketplace at a conference in Germany, according to Reuters.

He said: “Private equity is a rounding error in the capital markets. We’re tiny.”

His comments came a day after his firm took part in the largest leveraged buyout in history to take US utility TXU private, and amid a heated debate over private equity in the UK Parliament, the European Union and the World Economic Forum.

The recent spate of public to private deals accounted for just 3 percent of the companies worth $750 million or more, Bonderman said.

Buyout firms are facing flak from UK unions, which are taking aim at job cuts by private equity firms and calling for an end to tax breaks that make leveraged takeovers possible.

However, Bonderman, speaking on a panel at the conference in Frankfurt, said there was no reason why the industry could not grow to be much more substantial than it is today.

Private equity deals continue to surge. So far this year, volume is up 65 percent from the same time a year ago to $97.7 billion, according to data provider Dealogic. Last year, leveraged buyouts tallied a record $660 billion. 

Bonderman said that US regulation and backlash against executive pay are pushing companies to go private. “Executive pay as a percentage is going down, and fairly dramatically in the last five years in the US,” Bonderman said, citing a study of 350 large companies.

He said he thought there have been misleading statements about private equity, particularly regarding the extent of job cuts.

Citing a study showing that private equity-backed companies with more than 500 employees showed a significant increase in staff, he also said between 2004 and 2006, the largest German companies had 100,000 job cuts compared to 7,000 job cuts from private equity backed companies.