Editor's letter

Looking back 12 months to the July/August 2007 issue of Private Equity International (where did the time go?), it doesn't take a genius to work out that the main preoccupation of private equity at that time was its image. Our pages recorded much evidence of this, including: the infamous remarks made by a senior industry figure about buyout executives paying less tax than their cleaners; criticism of the asset class reaching fever pitch on Capitol Hill; and a bunch of leading professionals in the UK defending themselves in front of a Parliamentary Treasury Select Committee.

time the following issue came around, the term “credit crunch” was beginning to appear in our coverage – and also starting to force its way into the popular lexicon. There was another problem brewing, too. When 2007 dawned, the oil price was just above $50 a barrel. By the time of our July/August issue, the equivalent price was around $70. One year on, and oil is twice the price: approximately $140 a barrel at the time of going to press. The world is now officially in the grip of an oil crisis.

Of course, private equity firms are nothing if not adept at creating opportunity out of adversity. This helps to explain why, as Philip Borel reports in his In Europe column on page 22, energy was the most popular sector for investment in the first quarter of this year. In the Energy supplement which accompanies this issue, we explore all the key matters surrounding private equity involvement in an area that appears to offer outstanding potential.

Large, non-specialist investors will no doubt be scrutinising opportunities in energy as well as other areas where they may not traditionally have put capital to work. Testing the limits of fund agreements may be seen as a necessary consequence of the lack of leverage available for the largest deals. Nonetheless, there is a fine line between investing creatively and being guilty of strategic drift. Limited partners are reported to be worried about the latter and closely scrutinising fund managers' activities for evidence that they are guilty of it. For these and other issues affecting investor relations today, turn to our cover story on the subject starting on page 57.

Enjoy the issue,

Andy Thomsonandy.t@peimedia.com