Mitt Romney's campaign for the Republican presidential nomination might be costing his private-equity backers a lot more than they bargained for.
Attacks by opponents portraying Bain Capital LLC, Mr. Romney and other buyout managers as corporate looters who enrich themselves at the expense of ordinary workers have put a spotlight on the industry that will affect negotiations about future investments, according to officials and trustees at public pension funds. As firms struggle to raise funds, pension fund executives might be more reluctant to commit money and may ask for more details on job creation and push for lower fees, these officials said.
“Private equity managers' wealth and tax rates are on display at a time when pension funds are getting squeezed,” said Joseph Alejandro, treasurer of the New York City Patrolmen's Benevolent Association. “Public investors should raise questions about whether the business is overly generous for managers. I hope the renewed attention on the industry will lead to discussions on fees and greater controls like claw-backs.”
The debate is affecting private equity managers, including Mr. Romney's former firm, Boston-based Bain Capital, as they're competing for a shrinking pool of investor dollars. Fundraising slowed in the third quarter to the weakest pace since before the global financial crisis and stayed near that level in the final three months of the year, according to London-based researcher Preqin Ltd.