Istithmar CEO fends off private equity critics

DUBAI (Reuters) - The managers of listed companies not private equity firms should be taken to task over how they run companies, the chief executive of Dubai-owned investment group Istithmar said on Sunday, countering criticism from labor unions as the industry pursues larger takeovers.

Private equity firms, which spent $660 billion globally last year on takeovers, have been accused by labor unions in recent months as little more than asset strippers.

Istithmar chief David Jackson said private equity firms often run companies better than managers under the public model.

"The evil button is on the wrong group of people," Jackson said at the Reuters Middle East Investment Summit in Dubai. "Opportunities exist for private equity firms in part because there is a disconnect between management and shareholders."

As asset prices rise, it was becoming more difficult for private equity firms, which buy firms using debt and then resell them either via flotation or direct sales, to make a profit.

"The model that a lot of people are familiar with, that all we do is fire employees or asset strip, (is) wistfully gone," he said.

Istithmar, which bought a 2.7 percent stake in Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) for $1 billion and joined a consortium to acquire Swiss firm SR Technics last year, manages equity worth $4 billion from the government of Dubai, part of the United Arab Emirates.