April 3, 2011 / 11:03 PM / 7 years ago

New guard arrives to steady private equity ship

LONDON (Reuters) - A new guard of private equity bosses has emerged at the top of the industry, striving to make their business more open before investors and policy makers, and alter preconceptions of this at times secretive industry.

Accusations of asset stripping plagued the industry as vast profits came quickly, followed by the worries that many of their businesses could collapse under the weight of their debt destroying jobs.

Since those dark days, Europe’s private equity industry has been on a mission to improve its image and get its message across.

Into this environment, new senior figures have emerged as calming influences at the top of some of the largest private equity houses either to put them back on track or to continue to steer them through choppy markets.

Three figures to step up in the wake of the credit crunch are Michael Queen, chief executive of 3i Group (III.L); Lionel Zinsou, chairman of PAI Partners; and Joe Baratta, senior managing director at Blackstone (BX.N), who has taken on leadership of the firm’s European operations.

All three will be speaking at Reuters M&A summit this week, which will host some 70 bankers and private equity professionals focusing on deals in Europe, Asia and North America.

Queen arrived as a stabilizing influence for 3i at a period when companies were under pressure and the group was struggling with more than 2 billion pounds ($3.20 billion) of debt piled on by his predecessor Philip Yea.

His approach was conservative and at times unpopular -- pledging to halve debt within a year and launching a rights issue to reach that target.

But two years on, markets have responded to his measures. 3i shares are roughly double what they were when Queen took the helm.

Queen comes across as comfortable and self-assured, some say, thanks in part to 25 years with the firm in a variety of roles including finance director and head of its infrastructure arm.

Now Queen’s task is to reveal his vision for the firm, says Iain Scouller, analyst at Oriel Securities.

“I would probably say the change we are going to get is more conservative, building on things gradually rather than rushing in in a radical way. That’s part of his nature, the way he approaches things,” Scouller said.

Reducing volatility, and expanding assets under management and the fee income that come with that are targets in his sights, Scouller said.


    Zinsou, a student of France’s premier political school and adviser to French Prime Minister Laurent Fabius in the mid-1980s, came to the helm of PAI in 2009 after former chairman Dominique Megret and senior partner Bertrand Meunier left under a cloud.

    He drew on all his political experience and ability to convince the firm’s investors to throw PAI a lifeline. Some say the firm survived by the skin of its teeth and attribute it only to 100 days of meetings with investors, persuading them to back the new management and new vision.

    Now many say he has made the firm more open, holding regular investor meetings and conducting conference calls to inform them about new deals.

    And he has made the firm more collegial, devolving power to dealmakers in countries around Europe.

    Joe Baratta, recently turned 40, came to Europe 10 years ago. Together with David Blitzer, he’s largely credited with building the firm’s private equity business in Europe. He has now succeeded Blitzer as the head of Europe but one banker, who knows them both, said Baratta is likely to take a more considered approach than his colleague, who had a propensity to “shoot from the hip.”

    Far from being a “strip and flip” merchant, Baratta cemented his reputation with Merlin, then a small theme parks operator, which through acquisition and new openings has grown into world number two behind Disney.

    Baratta, Zinsou and Queen will be joined by the heads of European financial sponsors coverage for UBS UBSN.VX (UBS.N) and Barclays Capital (BARC.L), Michael Abraham and Matt Grinnell, respectively, at the Reuters M&A Summit this week.

    Reporting by Simon Meads; Editing by Phil Berlowitz

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