If you ask private-equity executives whether the campaign rhetoric surrounding Mitt Romney’s buyout past is hurting business, most will wave you off.
For billionaire investor Wilbur Ross, on the other hand, the effect has been real — and he’s ready to admit it.
Ross, the chairman and CEO of WL Ross & Co., recently cut the fundraising target for his most recent buyout fund by almost half, closing on $2.2 billion after targeting $4 billion. He told Bloomberg TV today that attacks led by the Obama campaign on Romney’s role at private-equity firm Bain Capital have hurt fundraising.
“All the campaign rhetoric about private equity has not been a helpful thing,” said Ross, 74. “There has been an atmosphere of concern, and that’s the fact. Everybody has had some troubles raising capital this time.”
The concern from Ross — who since 2000 has raised five funds that invest in health care, energy, banks and other industries — comes at a time when big buyout firms are on the road seeking fresh capital. The Carlyle Group, for example, is hunting for cash to feed 11 funds, including a $10 billion flagship.
Ross, a Romney supporter, attributed the difficulty to wariness among the historically exuberant private-equity investors: state and local pensions. Because pension funds are already in the public view as they struggle to meet performance targets, their elected representatives are that much more sensitive to negative advertisements and incisive headlines, said Ross.
“They all live in goldfish bowls,” Ross said. “Things like newspaper headlines do make an impact on them.”
Ross’s view from inside the industry validates concern that some private-equity managers expressed at the beginning of the year, when the primary campaign raged and Romney was under attack from his own Republican peers. Blackstone Group President Tony James wondered at the time whether the campaign rhetoric could penetrate the Washington bubble and find its way into the board room.
“Pension funds have boards — they don’t want to be giving money to an industry that has a taint,” James, an Obama backer, said in February. “Similarly, boards of directors don’t want to sell their company to organizations they don’t view as respectable. So it could be very damaging for the industry.”