Slash and Burn: Is Private Equity - PE- Out of Control?

The Guardian, Oct 10, 2024, THE LONG READ

From football clubs to water companies, music catalogues to care homes, private equity has infiltrated almost every facet of modern life in its endless search to maximise profits.
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Whenever I ponder the enormity of the multitrillion-dollar industry known as private equity, I picture the lavish parties thrown by Stephen Schwarzman – and then I think of the root canals. Schwarzman is the billionaire impresario of Blackstone, the world’s most colossal private equity firm. In August, he hosted a 200-person housewarming party at his $27m (£21m) French neoclassical mansion in Newport, Rhode Island. It was a modest affair compared to the grand soiree he threw himself at his Palm Beach, Florida, estate for his 70th birthday, in 2017.

That black-tie bash was itself a sequel to his multimillion-dollar 60th, in 2007, which became a symbol of the sort of Wall Street excess that led to the global financial crisis. The Palm Beach party, which some reports say cost more than $10m, featured Venetian gondolas, Arabian camels, Mongolian acrobats and a giant cake in the shape of a Chinese temple. “Brilliantly stimulating” was the billionaire industrialist David Koch’s review. Gwen Stefani serenaded Schwarzman as Jared Kushner, Ivanka Trump and several members of her father’s cabinet looked on.

It was a world in miniature, ruled over by a modern Croesus – the perfect symbol for a form of money-making that has infiltrated almost every facet of modern life.

Preschools and funeral homes, car washes and copper mines, dermatologists and datacentres – private equity is anywhere and everywhere that money changes hands. If it can in any way be marketed or monetised, private equity firms have bought it – from municipal water supplies to European football clubs to the music catalogue of the rock group Queen. By some estimates, these firms now control more than $13tn invested in more than 50,000 companies worldwide. “We cannot overestimate the reach of private equity across the global economy,” Sachin Khajuria, a former partner at Apollo Global Management, which manages half a trillion dollars in assets, wrote in 2022.

It’s not just that hundreds of millions of us interact with at least one private equity-owned business every day. More and more people, especially the relatively poor, may live almost their entire lives in systems owned by one or another private equity firm: financiers are their landlords, their electricity providers, their ride to work, their employers, their doctors, their debt collectors. Private equity firms and related asset managers “increasingly own the physical as well as financial world around us,”...

https://www.theguardian.com/business/2024/oct/10/slash-and-burn-is-private-equity-out-of-control