Blackstone defends private equity role in business

By Daisy Ku and Kate Holton

LONDON (Reuters) - Stephen Schwarzman, founder of U.S. private equity firm Blackstone (BX.N: Quote, Profile, Research), defended on Monday his industry's often vilified role in the world, saying it built better companies and distributed wealth.

Private equity firms have enjoyed exceptional growth over the past few years, thanks to abundant credit.

But they have drawn harsh criticism from unions, politicians and the public for stripping companies of their assets and burdening them with debt.

"We are viewed as a destructive force with a short-term perspective, levering companies and stripping their assets to enrich a few nasty people like me, who then don't even pay taxes on all that they get in such an unsavory manner," he told a conference.

"I suspect that private equity's current image has been coloured by myths and fears that have more to do with anxiety about changes in the global economy," he told the annual event by the Confederation of British Industry.

Schwarzman said private equity firms were not open enough and had to communicate more to improve their public image.

Philip Yea, chief executive of British private equity firm 3i Group Plc (III.L: Quote, Profile, Research), echoed Schwarzman's views.

"There is an information gap that we need to fill, and fill positively," Yea said.