By Megan Davies
NEW YORK (Reuters) - Private equity investors know they're in for the long haul and aren't too upset about bumps in the road as long as a fund hasn't lost money, the chief executive of mid-market buyout firm Diamond Castle said on Tuesday.
It has been nearly impossible for buyout firms to do the bread-and-butter business of leveraged buyouts since the credit crunch that started in the summer. Lawrence Schloss, chairman and CEO of Diamond Castle, said the firm, founded in 2004, still had a billion dollars left to spend out of around $1.8 billion raised.
But the fund's limited partners -- the pension funds and others that invest in it -- are in for ten years, he said. They "get upset if all of a sudden you've lost their money ... but no one's lost lots of money," said Schloss, speaking at the Reuters Hedge Funds and Private Equity summit in New York.
"This only started in July," said Schloss. "Some would argue that the stock market has gone nowhere or down and that's the bogey we have to beat. I think we can do better than that and historically private equity has done better than the public market."
That echoes the sentiment of Michael Travaglini, executive director of the $52 billion Massachusetts state pension fund, who said Monday that private equity is still an attractive enough investment to put money into despite the drying up of leveraged buyouts.
Lawrence Lenihan, managing general partner at New York-based PequotVentures, the venture capital arm of hedge fund Pequot Capital Management, said at the summit on Tuesday that he had no control over how much capital investors allocate to venture capital, but had to compete to get a slice of the pie.
"We're competing for whatever allocation we have," he said. "We compete on our track record, the personnel we have and the strategy."
(For summit blog: summitnotebook.reuters.com/)
(Editing by Gary Hill, Phil Berlowitz)
© Thomson Reuters 2009. All rights reserved.
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