Private equity firms must expand beyond their traditional geographic interests and industry expertise to be successful, Bain Capital’s Steve Pagliuca told a gathering of industry professionals at the 10th Annual MIT Sloan Private Equity Symposium on April 5.
“The successful players are going to have a huge value-added focus,” said Pagliuca. “You’re going to have to have a global reach, deeper expertise, and the ability to find and evaluate the best deals in the market.”
Pagliuca, managing director of the global investment firm and co-owner of the Boston Celtics, was the closing keynote speaker at the symposium, headlined, “Growth Beyond Traditional Markets.” It was held at the MIT Media Lab.
Pagliuca explained that private equity firms need to search for new markets now that tough economic times are reducing returns investors can expect from U.S. and European investments.
He noted that Chinese leaders “wake up every day” looking for ways to put capital to work to lift their people out of poverty. India’s government is working to become friendly to investment. And Brazil and Latin America are “very exciting places these days,” with strong natural resources.
As those countries grow, Pagliuca said, businesses need capital and expertise to grow, creating opportunities for private equity firms.
Global presence isn’t enough. Private equity firms must have deep knowledge of many industries to “grow and transform and build” businesses in those regions. For instance, Bain has energy, health care, retail, industrial, and high technology divisions. It also offers companies every level of capital—venture, debt, and private equity.
Pagliuca, a member of the nonpartisan Campaign to Fix the Debt, said that the federal government must do more to control the national debt, which he called a drag on the economy and private equity investment.
The national debt could be cut in 15 years by raising taxes and cutting spending by .3 percent annually, Pagliuca said.
MIT Sloan students organized the symposium, which was attended by approximately 250 private equity and venture capital industry leaders and students. Students selected the theme and the panels on creating middle market operational value, energy, health care in Latin America, technology, and finance.
Phil Canfield, managing director of Chicago private equity firm GTCR, and Gary Loveman, CEO of Caesars Entertainment Corp., also gave keynote addresses.
“This is a great example of action learning—working an event outside the classroom, finding it relevant to the industry you aspire to work in, and gaining management experience,” said Mike Reynolds, MBA ’14, one of the organizers of the symposium.
The symposium was sponsored by Choate Hall & Stewart LLP, Ernst & Young, Mekko Graphics, and Pitchbook.