Editor's letter

Fading celebrities may well empathise with the old adage that there's no such thing as bad publicity. The stars of the private equity world – perhaps because their status is still that of rising rather than fading celebrity – may beg to differ: negative coverage for private equity is on the rise.

A double whammy came in October. First to put the boot in was Business Week, with a cover story entitled “Gluttons at the Gate: how private equity is using slick new tricks to gorge on corporate assets”. With a headline like this, you know that what follows is unlikely to be flattering, and with its focus on the alleged balance sheet chicanery of today's buyout firms, the article did not disappoint.

Then, from the Financial Times, came “Ill effects: why the spotlight is turning on to private equity”, a follow-up blow to the solar plexus detailing investigations into possible anti-competitive practices by the US Department of Justice (see p. 22).

Of course, it's easy to conjure a dramatic headline; less easy to find evidence of genuine wrong-doing. Industry professionals are reported to be riled by the probe in the US, for example, because they strongly believe there is no case to answer. Nonetheless, when such allegations arise, they serve to underline how important it is for the asset class to master that tricky skill known as good PR.

In the cover story of Private Equity International this month, we look at private equity's interaction with the IPO market (p. 45). In this area, too, the industry has found itself subjected to some close scrutiny. We examine the controversy surrounding so-called competitive IPOs, where brokers effectively compete to win the mandate in an auction. The over-optimistic issue price that can all too easily result from such a process has, on a number of occasions, resulted in private equity-backed companies being effectively told by the market to have a re-think and come back later. Such exchanges do little to build relations with institutional investors.

But let us not paint a picture of gloom and doom about private equity's reputation.

In many quiet ways, often out of the media glare, industry professionals are doing sterling work – as typified, for example, by the understated efficiency with which Dutch mega-LP AlpInvest Partners goes about its business (p. 38) and the way in which pioneering GPs are helping to raise the profile of private equity in Spain (p. 54).

We also note the accelerating momentum of venture philanthropy as increasing numbers of individuals seek to donate time and money to worthy causes (see p.

70). In the public relations stakes, that's a sure-fire winner.

Enjoy the issue,

Andy Thomson

Commissioning Editor