NEW YORK – The world may prove to be forever altered by Sept. 11’s terrorist attacks on the U.S., but the international private equity industry remains relatively unchanged with business continuing largely as usual, according to a number of market players.
Following the deadly terrorist attacks, the most immediate question facing the industry was one of travel. Indeed, in the immediate aftermath of Sept. 11, some U.S.-based firms which invest internationally, like HarbourVest Partners LLC, instituted travel bans, said Ofer Nemirovsky, a managing director at HarbourVest, which has offices in Boston, Hong Kong and London.
Advent International, which has 17 offices worldwide, told its investment professionals not to travel in the days following the terrorist incidents, unless they felt comfortable doing so, said Doug Kingsley, a managing director at Advent.
However, any travel-related fears appear to have subsided quickly among the community of international private equity investors, as HarbourVest lifted its travel ban after two weeks, Nemirovsky noted. Meanwhile, Advent planned to go ahead with its annual limited partner meeting in Paris scheduled for late last month, Kingsley added. While not all of the firm’s LPs decided to make the trip, most were planning to come to the meeting, he added.
“You just have to plug along and have it be business as usual,” said Glenn Rieger, a managing director at Cross Atlantic Capital Partners, which has offices in Radnor, Penn., Dublin, Ireland and London. “Travel comes with the job. It is just a fact of life, and life goes on. Not blindly, but it goes on,” he noted. Following the attacks a number of Rieger’s co-workers had already made international trips without incidents. In fact, the international flights seemed to be less of an ordeal than Rieger’s own recent business-related flight to Chicago, which involved a lot of waiting on lines due to new, stricter airport security measures, he added.
Full Steam Ahead
Echoing the VCs, Mark Heesen, president of the National Venture Capital Association, said he did not think the terrorist attacks would prevent U.S. firms from investing on a global basis. Heesen pointed to early-stage investing powerhouse, Greylock Partners, which announced its new initiative to invest in Europe and Israel on Sept. 17, nearly a week after the terrorist assault on America, as proof that U.S. firms will continue to invest internationally. The attacks did nothing to change Greylock’s travel plans or its international investment strategy, a spokesperson for the firm said.
Nonetheless, there will likely be some changes in approach by international private equity investors, a few VCs said. “Maybe some people will think twice about flying abroad every month, if that is part of their approach, and will start using video conferencing a little bit more-that is just human nature and good economics right now,” Advent’s Kingsley said. “We have a video conference every week between our Boston and Palo Alto, Calif. offices, so it is nice to have that infrastructure in place, if people start dropping bombs.”
While other VCs agreed that firms would likely make more use of their telephones and video conferencing capabilities as a substitute for travel, technology can only do so much, said HarbourVest’s Nemirovsky. “You cannot make a new investment via the telephone or through a video conference,” he said. In the short term, this may prove to be something of a hurdle for firms that do not have many investment professionals abroad, he added. “Spouses and children are all asking questions right now, but eventually the world has to get back to business and the private equity industry is not any different,” he said.
Indeed, Kingsley said he is optimistic about investment opportunities over the next several years. “Prior to Sept. 11, the world was returning more to normal. Private equity investors were back to picking good companies with good management teams and solid business plans,” he said.
Despite the generally positive feelings among international investors, there is some question as to what the future holds, Kingsley noted. “We are in sort of uncertain territory as to how or what the counter-response to the U.S. response will be. Only time will tell about that, and then that could definitely change some things in the marketplace, if terrorism became a more regular occurrence,” he said.