Last year, private equity invested nearly $11 billion in North Carolina’s economy, strengthening companies and securing good-paying jobs. In 2014, this asset class also returned over 18 percent, net of fees, to North Carolina’s public pension, benefiting hardworking teachers, firefighters, public servants and police officers.
With such a positive effect, it is unfortunate that Andrew Silton misrepresented the performance of private equity and the role of private equity managers in his May 17 Work & Money column “Rising wealth of money managers has a downside.”
Silton focused on the fees paid to private equity firms as part of North Carolina’s investment strategy, with the implication that they were outsized. But his own numbers show that fees were less than 1 percent of the gains to the North Carolina pension plan last year.
Silton also wrongly likens private equity managers to money managers. Private equity managers do far more to add value to the businesses they own than money managers. Private equity managers hire senior executives, develop strategic business plans, sit on boards of directors and pay their investors minimum returns before they can take their own profits.
This hands-on entrepreneurial spirit and long-term commitment are why private equity has proven to be a success for investors, especially in North Carolina.
President and CEO, Private Equity Growth Capital Council