Random Ramblings

Carlyle Group co-founder David Rubenstein last July gave a keynote address to ACG Boston, in which he mentioned that the buyout market should have a dedicated trade group in Washington. An audience member joked during Q&A that it would be tough for any lobbyist to have better governmental access than what Carlyle already enjoys, but Rubenstein correctly observed that the buyout market was too large to remain unrepresented on K Street. Now it seems that Carlyle – along with Blackstone, KKR and Texas Pacific Group – is doing something about it.

The four mega-firms have begun preliminary discussions on forming a trade group that would focus on educating (read: lobbying) lawmakers on private equity matters. Please let me reemphasize the word “preliminary,” as the group does not yet have a defined mission. For example, will it mostly focus on issues affecting $10 billion+ funds like its founding quartet, or will it also include a diverse base of lower-market, middle-market, large-market and mezzanine firms. Will it be global or domestic? Who will run it? What will be its name?

While I wait for official answers to these questions, here are my grains of salt:

• Narrow or Broad? Broad. It makes sense for the industry’s largest firms to be spearheading the effort, but trade groups are strongest when they have large memberships. For example, a Carlyle/KKR/Blackstone/TPG organization might not have much sway with a Congressman from Arizona or Kentucky (no offices/few portfolio companies). A more diverse group, however, would have home-state representation everywhere but Alaska (yup, there is a small PE firm in Hawaii).
• Global or Domestic? Global. Not sure this should even be a question, given the way that the founding firms are investing. It’s great to lobby the U.S. government, but domestic PE firms are having some of their toughest struggles in matters of foreign government approvals. Get reps on the ground in Europe, China, India and the Middle East (sorry Latin America, you just don’t matter enough right now). Also, this goes to the aforementioned issue of membership size equaling strength. Why prevent firms like Permira, Cinven, etc. from being members?
• Name? International Private Equity Association (IPEA) is the likely candidate, but I know that PE Week Wire readers can do better. Please send in your suggestions, and the best ones will be reprinted and passed on to those who will make the final decision.
• Staff? Could it end up being run by Rubenstein himself? Sure it’s highly unlikely, but given his affinity for the issue, limitless energy, high-level government contacts and endless presence on the industry conference circuit. Could it be me? Probably not the rah-rah advocate they’re looking for.

A couple of unrelated notes: There are some news reports today that Carlyle is looking to hire a government affairs director, but that job is completely independent of the IPEA (let’s use it as a working name). Also, the National Venture Capital Association is aware of the IPEA, and has expressed its support. Spokeswoman Emily Mendell says that there will likely be issues like SOX where the two groups work together, but also that certain NVCA issues like entrepreneurship, stem cell research, etc. probably would not have much interest for IPEA members.

*** A few weeks back, I told you about the myriad of private equity pros running for various political offices. First we had to cross Bill Weld off the list. Now please subtract Marc Holtzman, who had been running for the Republican nomination to be governor of Colorado. Holtzman ran EurAmerica before selling it to ABN Amro, but couldn’t overcome funding troubles and legal challenges designed to make sure that only GOP congressman Bob Beauprez would appear on the ballot. On the bright side, Holtzman got married last week.

*** Fifty U.S.-based venture capital firms raised around $11.2 billion during Q2 2006, which is the highest quarterly tally since Q1 2001. This is according to new data released today by Thomson Financial (publisher of the PE Week Wire) and the National Venture Capital Association. Find the full release at www.nvca.org

*** Greylock today announced that it had closed its inaugural Israeli fund with $150 million in capital commitments. Is this good or bad PR timing? Can’t quite tell. On a far more serious note, I’m interested to hear from Israeli readers – and Lebanese ones, if we have them -- about their feelings on the war, and how it will affect the local private equity markets. I’ll run responses on Wednesday, along with my own thoughts.