Yesterday, the House Financial Services Committee held a hearing, “Examining the Practices of Private Funds,” which revealed that many members on both sides of the aisle value the important role private equity plays in their states and districts.
Testifying before the committee, American Investment Council President and CEO Drew Maloney discussed private equity’s positive role supporting jobs, investing in American businesses and strengthening the retirement funds of public workers in all 50 states.
- “In total, the private equity sector in the U.S. employed 8.8 million people and paid $600 billion in wages and other benefits in 2018,” said Drew Maloney. “Private equity invested $685 billion in more than 4,700 businesses across the U.S. in 2018. Most of those deals involved small- or mid-sized companies … Ninety-one percent of public pension funds have invested some portion of their capital in private equity, and in 2018, we generated the strongest return of any asset class over the last 10 years.”
Ranking Member Patrick McHenry (R-NC) used his time to explain how Senator Elizabeth Warren’s (D-MA) misguided economic proposal targeting private equity would erase somewhere between 6.9 million and 26.3 million jobs and threaten the pensions of millions of Americans, according to a recently released report from the U.S. Chamber of Commerce.
Representative Bill Huizenga (R-MI), Drew Maloney, and Brett Palmer, who is president of the Small Business Investor Alliance, discussed how private equity allows businesses to develop long-term plans for growth instead of focusing on short-term quarterly earnings reports. Rep. Huizenga also listed several businesses in his district that have benefitted from private equity investment including Challenge Manufacturing, JR Automation, Custom Profile, Hadley Products, and Brillcast Manufacturing.
Representative Gregory Meeks (D-NY) and Drew Maloney discussed how organized labor and minority-owned firms are partnering directly with private equity to support jobs and generate stronger pension returns on the current redevelopment of Terminal One at JFK Airport, which is located in Rep. Meeks’ district.
Representative Ann Wagner (R-MO) noted that 47,000 of her constituents work at private equity-backed companies and that her district has received $17 billion in private equity investment.
Representative Steve Stivers (R-OH) and Wayne Moore, who serves as a trustee for Los Angeles County Employee Retirement Association, discussed how private equity is the best performing asset class for public pensions net-of-fees.
Representative Ben McAdams (D-UT) detailed how private equity investments in Utah have played a critical role in expanding early childhood education, lowering recidivism rates, reducing homelessness, and building clean energy projects.
Representative Anthony Gonzalez (R-OH) told the committee that, “we need more private capital” in northeast Ohio. For the past decade private equity has supported Hyland Software, which is a local business in Rep. Gonzalez’s district that employs more than three thousand of his constituents.
Representative Roger Williams (R-TX) quoted Houston Firefighters’ Relief and Retirement Fund (HFRRF) Chairman Brett Besselman, “We are very confident in the prospects for private equity investments in our long-term investment mix. Private equity opportunities far exceed those available in stock market investing for the foreseeable future and are a welcome addition to our portfolio diversification effort.” Private equity delivered an 11.10 percent 10-year annualized return for HFRRF’s 7,354 active and retired members and beneficiaries in 2018.
Representative Josh Gottheimer (D-NJ) stressed that private equity investments generated the highest returns of any asset class for the New Jersey Division of Investment. These returns played a crucial role in supporting the retirement of local firefighters, schoolteachers and police officers.
Representative Denver Riggleman (R-VA) told the committee that he, “wouldn’t be here without private equity.” Thanks to a $90,000 investment from private equity, Rep. Riggleman and his family were able to grow their small business and hire 20 full time employees even though every bank refused to provide capital. Rep. Riggleman warned the committee that Sen. Warren’s proposed legislation would put his company and all its employees out of business.
Finally, Representative Al Lawson (D-FL) reminded the committee that, “private equity is often the best performing asset class for public pensions, and that is true here in Florida.”