The Global Economic Impact of Private Equity Report 2008 - World ...

Letter on behalf of the Advisory BoardJoseph l. rice, IIIChairman, Clayton, Dubilier & Rice, Inc.Chair of the Advisory Board for the World Economic Forum Globalization of Alternative Investments ProjectThe increasing privatization of economic activity around theworld is at the forefront of public attention.The private equity industry’s tremendous growth hasunderstandably sparked both interest and concern fromseveral quarters. While private equity’s constructive influencein fostering the renewal of US corporations 20 years agois well documented, its more recent impact in the US,as well as in Europe and emerging markets, which nowsurpass the US in private equity activity, has not been ascomprehensively analysed.Recognizing that private equity, along with other alternativeinvestments, has matured significantly since the 1980s,as part of its project on the Globalization of AlternativeInvestments, the World Economic Forum has taken thelead on a research initiative to examine the impact of privateequity ownership on long-term investment, employment,corporate governance and other important measures ofeconomic health. At the same time, the Forum hascommitted to serve as a catalyst to engage industryparticipants, policy-makers and other key stakeholdersin an ongoing dialogue about the alternative investmentasset class.The Working Papers that are included in this volumerepresent the initial findings from the private equity researchcommissioned by the Forum. The various studies wereconducted by a renowned group of scholars representingacademic institutions in North America, Europe and Asia.An Advisory Board of distinguished international expertsrepresenting labour, industry, finance, government andpensioners was assembled by the Forum to help guidethe project and provide the academic team withpractitioner perspective.While the members of the Advisory Board do not necessarilyendorse the conclusions reflected in the papers, theyrecognize that the body of analysis produced by the Forum’sacademic team is among the most comprehensive andrelevant ever undertaken on private equity. Literally thousandsof buyout transactions going back as far as 1970 have beenanalysed. The large-sample studies on the effect of privateequity ownership and innovation are unprecedented in theirscope and the findings suggest fruitful avenues for additionalresearch and analysis.The Forum and the academic team are to be commendedfor beginning what will hopefully be a multi-year effort to builda solid factual basis for assessing private equity globally andfrom which sound conclusions and public policyrecommendations can eventually be made.One of the biggest challenges ahead for the private equityindustry will be to act responsibly with the enormous amountof capital entrusted to it in the past several years. In thisregard, the insights from the Forum-sponsored researchwill be instructive to all of us – whether investor, industrialist,employee or policy maker – in better understanding thegoverning dynamics of the asset class.On behalf of the Advisory Board, I would like to express ourthanks to the academic team for their important contributionand to encourage the Forum to continue its efforts to buildmore understanding and thereby increase public confidencein private equity investment activity.Members of the Advisory Board for the World EconomicForum Globalization of Alternative Investments ProjectChairman:Joseph L. Rice, III, Clayton, Dubilier & Rice, Inc.Co-Vice Chairs:R. Glenn Hubbard, Columbia Business SchoolMichael Klein, Citigroup International plcBoard Members:Piero Barucci, Autorità Garante della Concorrenzae del MercatoWim Borgdorff, AlpInvest PartnersUlrich Cartellieri, Former board member at Deutsche BankNick Ferguson, SVG Capital plcGao Xiqing, China Investment Corporation LimitedPhilip Jennings, UNI GLOBAL UNIONJoncarlo Mark, CalPERSYoshihiko Miyauchi, Orix CorporationAlessandro Profumo, Unicredit GroupKevin Steinberg, World Economic Forum USADavid Swensen, Yale UniversityMark Wiseman, CPP Investment BoardThe Global Economic Impact of Private Equity Report 2008Letter on behalf of the Advisory Board