Bain Capital Exec Sees PE Shakeout

BERLIN (Reuters) – Boston-based Bain Capital managing director Stephen Pagliuca said on Wednesday he foresees a shake-out in the number of private equity-type firms as the financial crisis hits.

Pagliuca, speaking at the SuperReturn private equity conference in Berlin, cited data showing the number of private equity-type firms surged from 950 in 2000 to 1,700 in 2008.

He said he thought there would be a “shake-out both on the small end because of the scarcity of capital and in the large end with people who… took too much risk”.

But Pagliuca predicts that the firms which survive will be “very viable institutions”.

Pagliuca also said in the current period of stress, “capital is very precious”.

“Private equity firms that have capital can use it to make great investments,” he said. “Private equity has always done well in these periods. They can be part of the solution not the problem.”

Bain is one of the world’s largest private equity firms, and has investments in numerous companies such as U.S. radio operator Clear Channel, retailer Michaels Stores and restaurant chain Outback Steakhouse.

By Megan Davies
(Editing by Elaine Hardcastle)