Virginia Rep. To Intro PE Exemption Legislation, Riverside To Testify

More details are surfacing about efforts to exempt private equity firms from Dodd-Frank.

It appears Rep. Robert Hurt, Republican from the Fifth District of Virginia and member of the Financial Services Committee, is the representative responsible for drafting legislation that would exempt private equity firms from Dodd-Frank, according to a source.

It’s still not clear if this would be a blanket exemption for all firms, though that is what our source believes. A spokesperson for Hurt has not return requests for comment. As Buyouts previously reported, the bill would seek to restore the private equity exemption language that passed the Senate but was dropped in the Dodd-Frank conference committee.

Also, Pam Hendrickson, chief operating officer of The Riverside Company, has agreed to testify at a Financial Services Committee hearing next Wednesday, according to firm spokesman Graham Hearns. “It wasn’t something we were proactively seeking but we’re happy to help the industry and educate the public,” Hearns told sister Web site Buyoutsnews.com.

During the hearing the committee will discuss Hurt’s legislation and Hendrickson is expected to explain why a Dodd-Frank requirement that firms register as investment advisers with the Securities and Exchange Commission shouldn’t apply to private equity and would inhibit investing.

Having Riverside testify makes sense on a multiple levels. Though global, the firm is seen as a leading buyout shop that prides itself on buying and expanding small companies. Also, in August it exited a company based in Hurt’s district: SunTek Holding Co., a Martinsville, Va.-based company that makes solar-control window films for cars and buildings under the name Commonwealth Laminating & Coating Inc. Don’t be surprised if Hendrickson touts the deal as an example of the good private equity can do for small businesses.

Riverside bought the company in 2006 and, according to its Web site, made investments that boosted the company’s production capacity, expanded its international presence, and expanded its product line. Riverside sold the company in August 2010, generating, according to the firm, 10x its investment and a 68 percent gross IRR.

Bernard Vaughan is a Senior Editor at Buyouts Magazine. Follow his tweets @BVaughanReuters. Follow Buyouts tweets @Buyouts. For information on how to subscribe, contact Greg Winterton at greg.winterton@thomsonreuters.com.