Bain shuns spotlight as Romney takes the heat

NEW YORK Fri Jan 13, 2012 2:30pm EST

Republican residential candidate and former Massachusetts Governor Mitt Romney speaks during a campaign event at the University of South Carolina Aiken in Aiken, South Carolina January 13, 2012. REUTERS/Chris Keane

Republican residential candidate and former Massachusetts Governor Mitt Romney speaks during a campaign event at the University of South Carolina Aiken in Aiken, South Carolina January 13, 2012.

Credit: Reuters/Chris Keane

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NEW YORK (Reuters) - Bain Capital LLC, the private equity firm co-founded by Mitt Romney, is trying its best to stay out of the spotlight as the frontrunner for the 2012 Republican presidential nomination comes under intense scrutiny for his time there.

The Boston-based firm has not come out in support of Romney, who spent 15 years at Bain, and neither is it contributing any funds to a private equity industry group that is planning a major media campaign to defend the industry's record.

Instead, Bain is limiting itself to defending its own track record during the 1980s and 1990s when Romney was at the helm and is going about business as usual, which includes raising money for a new private equity fund.

Romney has come under fire from campaign rivals in his traditionally pro-business party for the brand of capitalism that private equity represents, with attack ads focusing on the companies that laid off workers under his leadership and disputing his claim of helping create 100,000 jobs while at Bain.

The private equity industry is looking to avoid being caught in the crossfire. Its main lobby group argued this week that its members are a vital source of capital for the economy, investing more than $148 billion in 1,234 U.S.-based companies in 2010.

Bain has chosen not to go on the offensive as it would risk shifting the narrative more towards it, a source with direct knowledge of the firm's strategy said.

"The story is not about Bain; it's Romney who is running for president," the source said.

This strategy has served Bain well in the past, during Romney's other campaigns for office since 1994, when he challenged Ted Kennedy for his U.S. Senate seat in Massachusetts

Television spots back then also targeted Romney's involvement in Bain, featuring workers laid off at American Pad & Paper. Romney lost the 1994 race but investor appetite for Bain's funds grew unabated.

The firm attracted more and more money for its buyout funds, with Bain Capital Fund X closing at $10 billion in 2008, according to Preqin, a market research firm that follows private equity. Bain is preparing to hit the fundraising trail again this year, another source familiar with the matter said.

GOING ITS OWN WAY

Unlike some other private equity firms such as Blackstone Group LP whose chief executive Steve Schwarzman held a fundraiser for Romney, Bain lacks a well-known industry figure to speak out in the candidate's favor.

Bain's 88 managing directors, many of whom worked with Romney, "follow a long-standing tradition of operating as a consensus-oriented partnership," according to Bain's website.

They have opted not to have a figurehead since the founding partners moved on. "Their success is based on relying on a process rather than a star system. This is part of their consulting legacy originating from Bain & Company," said Joe Healey, who co-heads Korn/Ferry International's private equity practice and who has recruited for Bain.

Bain has also preferred to lobby for its interests separately from the rest of the industry. The firm is not a backer of the industry's main lobby group, the Private Equity Growth Capital Council (PEGCC).

The PEGCC was set up in 2007 and Bain is only one of three private equity firms to have pulled out of the group out of the 38 firms to have signed up. Instead, Bain relies on lobbying firms that include law firm Akin Gump Strauss Hauer & Feld LLP and Public Strategies Washington Inc.

Sources close to both Bain and the lobby group said the private equity firm did not renew its PEGCC membership in 2010, which costs between $750,000 and $1 million, because it found its interests best represented outside a body that also included publicly listed private equity firms such as Blackstone and KKR & Co LP.

The membership fee represents a fraction of the income Bain generates for managing over $65 billion in assets.

But as private equity gets attacked as a result of Romney's candidacy, the PEGCC is about to embark on a major media campaign to defend the industry, sources said, without Bain backing it.

The sources would not comment on the cost of the campaign. The PEGCC spent $2.4 million in 2010 and $1.7 million in the first nine months of 2011 on lobbying activities, according to congressional filings.

Bain and the PEGCC declined to comment.

(Reporting by Greg Roumeliotis in New York; Editing by Paritosh Bansal and Tim Dobbyn)

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