Party Politics Influencing Deal Making? Surely not!

November sees the 2012 US Presidential elections reach a conclusion and a lot has been made of Republican candidate Mitt Romney’s links to Bain Capital, the global private equity player. 

Some of the media have pilloried Romney for being one of the co-founders of Bain back in 1984, thus unleashing a private equity monster onto the unsuspecting US economy for the sole purpose of growing rich. However, others at the opposite end of the spectrum have used Romney’s extensive private equity and commercial experience as an example of what the US economy needs in a leader – someone who has the economic and business experience to get things back on track.

Thus there has been mixed reaction in the US media to yesterday’s announcement that the country’s Treasury was launching an USD 18bn offering of its shares in the US insurer AIG, thus potentially taking it to a minority holding in the company. The US government, via the Treasury Department, was forced to step in and bail out a number of organisations back in 2008 as a result of the “Credit Crisis”. This included AIG, Freddie Mac and Fannie Mae, the two national mortgage companies, in addition to many well known banks.

Some media sources see the timing of this offering and further unwinding of the US Government’s position as a cynical ploy by the incumbent Democratic party in a bid to be able to point to this as a success and prove that they have been able to return the tax payers’ money from a bail out that was at the time a deeply unpopular decision.  Other media outlets simply see this as the right deal at the right time for US tax payers.  For those of us watching from outside the US, the morning of November 7th will reveal who believed what about this particular deal.