Don't Trust S&P Reports on Private Equity, PEC Says
The Private Equity Council has a bone to pick with S&P's recent string of reports, which tracks the "Traces of Private Equity DNA" in defaulting companies. The problem, according to PEC, is that a list compiled by S&P looks at non-control stakes, which make up the majority of the PE-backed defaulters. Whether or not to blame a minority shareholder for a default is one thing, but S&P actually included at least one company that didn't even have PE investment at the time of default. PEC called the analysis "strained." S&P's latest report, which got media attention here and elsewhere, shows that 53 out of the 86 S&P rated defaulters are "related to private equity." According to PEC's investigation, only 22 companies had PE control stakes. I think this is a valid complaint, evidenced by an in-depth document (view it here) outlining S&P's "promiscuous" definition of the word private equity. The PEC list of 22 defaulters is available here.
