This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Romney's Claims Contradicted by His Own Peers: Street Whispers

Story updated to reflect Bain Capital's investing history.

NEW YORK ( TheStreet) -- Mitt Romney says businesses and investors are turned off to President Barack Obama's high taxes, costly regulation and the government's expanding power over the private sector.

Romney's peers in the private equity world would disagree.

A total of $74 billion, or about 70% of global private equity investments, have targeted U.S. companies this year, much higher than in other years, according to Bloomberg data on completed and announced deals. That's up from 53% in 2011 and 61% in 2007, the year before Obama was elected and a banner year for the industry.

The top five buyouts in 2012 have targeted U.S. companies, highlighted by Apollo Global Management's (APO - Get Report) $7.15 billion acquisition of El Paso's energy exploration unit. Only three of the top 10 deals involve companies outside of the U.S., the data show.

Newly opened private equity investment funds are also increasingly concentrated in the U.S., according to PitchBook data. Funds based in the U.S. have grown to over 70% of the private equity industry, up from 60% in 2007.

Those facts rebut Romney's argument that private capital is fleeing U.S. shores. You would think that Romney, as the former CEO of Bain Capital, would know. The private equity firm's buyout history shows that 77% of its investments are concentrated in the U.S., according to Bloomberg data. Since 2009, Bain has diversified itself and pushed into foreign markets, highlighted by its acquisitions of Japanese restaurant chain Skylark and Swedish security provider Securitas in 2011.

"When the price of doing business in America rises, it does not come as a surprise that entrepreneurs and enterprises cut back, let employees go, and delay hiring," Romney says in his 'Plan for Jobs and Economic Growth.' "[Obama's] distrust and antipathy for the private sector led to policies that burdened and constrained business at the very time we needed it to advance, to invest, and to hire. So much is at stake: Nothing less than the future of our great country," adds Romney.

On the other hand, European deals have withered because of a regional debt crisis as Asia has taken on greater significance.

Still, amid a worsening crisis in Europe and fears that once red-hot markets like China and Brazil will cool or even crash, private equity industry leaders have said the U.S. remains the most attractive region for investment.

In second-quarter earnings released Wednesday, Carlyle Group (CG - Get Report) co-founder William Conway noted that the investment environment in the U.S. continues to be strong and actually is advantageous compared with the rest of the world. It also should come as no surprise that the firm, the second-largest in the industry, is also opening new U.S.-targeted corporate buyout and real estate funds that could benefit from a strengthening economy.

"[We] continue to believe that the U.S. economy is likely to grow faster over the medium term than it did in the second quarter. ... As a whole, developing countries continue to grow more rapidly than developed countries, although growth is much slower than last year. This slower growth has not come as a surprise. We began to see significant weakening in China in September 2011," Conway said on Carlyle's earnings call.

Other private equity titans -- even those critical of President Obama's policies and tone toward the industry -- also are scouring the U.S. for deals. Blackstone Group (BX - Get Report), the world's biggest private equity fund, has raised eyebrows by making a full-fledged push into U.S. residential real estate, adding to a previous multibillion dollar economic recovery bet on commercial real estate.

"We are now buying post-foreclosed homes, which generally need some capital improvements, and we are leasing them up. We expect this activity to drive greater housing affordability and think it will help the nation economic recovery," Blackstone President Steven Schwarzman said on the firm's second-quarter earnings call.

"The U.S. and Europe are still the most attractive places to deploy capital," Schwarzman said, referring to real estate. Blackstone recently closed a $16 billion buyout fund -- the largest since the crisis -- that's likely to mainly target U.S. companies. Carlyle and private equity industry pioneer KKR (KKR - Get Report) are also nearing the close of multibillion-dollar U.S. buyout funds, the biggest since the financial crisis four years ago.

For more on private equity and the election, see why private equity has a social responsibility and why Carlyle Group co-founder David Rubenstein says Mitt Romney would need to raise taxes as President.

-- Written by Antoine Gara in New York

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
APO $17.43 0.11%
BX $27.79 0.04%
CG $17.11 0.00%
KKR $13.92 0.00%
AAPL $95.03 0.21%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs