Pam Hendrickson, chief operating officer of The Riverside Company, added her voice to the growing debate around private equity that was ignited earlier this month when President Barack Obama attacked rival Mitt Romney’s private equity career.
While Obama has maintained he is only attacking Romney’s career at Bain, and not the industry in general, the political attacks have sparked a debate encompassing the entire industry and whether it plays a legitimate role in the American economy.
Hendrickson gave her view on business channel CNBC Wednesday. Perhaps not surprisingly, her view was positive; Hendrickson has long been a vocal defender of the asset class, even testifying in front of US Congress several years ago about the industry.
We can't make returns unless we grow our companies, that's fundamental to what we do.
“We can’t make returns unless we grow our companies, that’s fundamental to what we do,” she said. “We’re in a risk-taking business, occasionally we’ll make mistakes, occasionally something will go wrong, but for 50 years this industry has been around, banks have been lending to the companies we buy, pension funds have been investing in our funds and they wouldn’t do that if on balance we weren’t successful.”
The private equity industry is partly to blame for the negative headlines that are flooding the media these days, she said. The industry never thought it needed to explain what it does, but now it’s “critical for people to have both the financial and intellectual capital we bring and I think that intellectual capital is something people often forget about,” Hendrickson said.
Attacks on Bain Capital – and the larger debate about private equity – is likely to continue through to November and the presidential election in the US. Democrats argue Romney opened himself up to attacks on his past career by claiming — without providing evidence — he helped create 100,000 jobs during his time at Bain Capital.
However, Obama has already experienced some blowback from the attacks on the industry — even from his own allies.
Democrats Cory Booker, the mayor of Newark, New Jersey, former Pennsylvania Governor Ed Rendell and former Obama auto industry advisor Steve Rattner (founder of The Quadrangle Group), have all come out in defense of the industry.