Kissinger fits firm's need for big name
By Katharine Campbell
Financial Times; Jun 03, 2002

Dr Kissinger will be the keynote speaker at a lunch hosted by Hicks Muse in
London on Wednesday. He will talk on matters of "globalisation" and
"terrorism" to senior industrialists and investment bankers.

This is the first chance for Hicks Muse, among the most prominent casualties
of the telecommunications and technology investment crash, to parade Dr
Kissinger.

Hicks Muse has already built a business in Europe. Its investments include
Yell, the UK directories company that is lining up a flotation.

Private equity firms, which spend much of their time shunning the limelight,
turn out to have a bit of a weakness for hooking up with prominent public
figures. In today's treacherous financial markets, trophy deals may be hard to
come by, but trophy names apparently less so.

Carlyle, the Washington DC-based private equity group, seems to have
developed this to a fine art. The firm, which built its reputation in defence
buy-outs, is chaired by Frank Carlucci, US defence secretary in the late
1980s, and has close links with George Bush senior, the former president. Its
well-connected advisers includes James Baker, former US secretary of state,
and Arthur Levitt, former SEC chairman, while John Major, former UK prime
minister, chairs the firm's European advisory board.

Hicks Muse already has a cast of luminaries on its advisory boards, including
Brian Mulroney, former Canadian premier, who was one of its connections
with Dr Kissinger.

But what do these big names actually do? In the case of Carlyle, quite a lot.
George Bush senior has played an important role at fundraising events, and
has also been on hand to schmooze prospective senior recruits to the
business, according to one private equity executive who resisted Carlyle's
blandishments.

But the firm's ties to the Bush administration have come back to haunt it, not
least since it emerged that the Saudi bin Laden family had been investors in
various Carlyle funds, a relationship that was quickly terminated after
September 11.

European private equity houses tend not to have gone for such grand
associations - and certainly not a name for a name's sake.

"In Europe there is more of a cynicism about these things," says one senior
European private equity specialist. "Simply having a name won't do a thing.
But we do go for people with genuine industrial door-opening capability. You
have to relate your name to your strategy."

So what of the role of the 79-year-old Dr Kissinger? According to one Hicks
Muse rival, he "is a big name . . . Buthis reputation is that he is not that
commercial. He likes to talk, it's hard to get him to stop talking, and he likes
to be paid a lot for doing it."

Hicks Muse says Dr Kissinger will be paid "a director's fee".

Given the deterioration in relationships between limited partners (institutional
investors) and general partners, following the large losses racked up by the
private equity industry, might not the services of a Nobel peace prize winner
be useful for fund-raising and investor relations? Mr Muse denies any such
role for Dr Kissinger.

"He is there to give us great advice on macroeconomic and political issues so
that we make better investments."