NYRUP TEMPLATE

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Private equity and hedge funds
On our way to a new European strategy
- The first steps
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- Our political, democratic choice -
The most competitive and dynamicknowledge-based
economy in the world, capable of sustainable
economic growth, more and better jobs and better
social cohesion.
Making Europe(2000 2005)
PES Group (Dec. 2005)
Europe of Excellence
PES congress (Dec. 2006)
The New Social Europe
Social market economy not market society!
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Europe of Excellence Investment Needs
Minimum 1 trillion Euro!
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We need the capital markets to finance our
investment needs on our terms!
BUT Subordinated as usual? Respecting our
choices?
Real economy investments
Financial marketsHFs PEs

• Cost effective? Stabilisation?
• Full transparency and accountability?
• Long-term, patient financing?
• Making target companies better off?
• Respecting companies values, social partners?

Our real New Social Europe comes first
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Financial markets not subordinated any longer!
No demonisation
Venture capital (only 5)
But enormous financial power
Still growing
Private equity, LBO 2007
Hedge funds 2007

• Dominating markets
• 20 PEs 4 mill. Workers
• 5 PE/LBO deals the budget of Russia India
• Multiple x 4
• Biggest European player gt TNCs
• LBO 2006 265 bn in Europe

• Dominating public markets
• Managing 1,300 bn
• Multiple x 4
• US 68 ? Europe 25 growth
• Off-shore 100
• London City 70

Financial contradiction to Lisbon/New Social
Europe!
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Whats at stake?
Long-term investments
Short-term thinking
Quick cashing out
Financial instability
Risks
HFs PEs
Workers moneyPensionfunds
Market abuse
Asset evaluation
Company viability
Next generation
Jobs conditions
LBOs
Healthy gt unhealthy companies
Job cuts
Worse conditions
Inequality
Coherence
Bonus/stockoptions
Management fees
Global strategy for welfare states
Tax evasion
Societies
Long-term investments and values come first
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Before and after
Target companies
Access (CEO)
Price-setting
LBO 20 80
No newinvestments
Tax evasion
1st sale
2nd sale
workingconditions
Extreme fees
High leverage of company
Extra dividends
Totalcontrol
Gross return pressure
Job cuts
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The cases same pattern
Extra Dividend
Huge debt
Job cuts
Grohe
?
?
? ?
Gate Gourmet
Automobil Ass.
TDC
Hertz
TUI AG
Edscha AG
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Our companies Before ltgt After LBOs
After
Before

• Unhealthy
• Thin net worth
• Debt ? High interest expenditure
• Job cuts ? Worse conditions
• No investments ? RD
• No long-term strategy

• Healthy
• Strong internal resources
• Low debt ? High cashflow
• Cooperation Our way
• RD ? Innovation
• Education ? Skills
• Long-term strategy

There must be a better way
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They can do better
None-transparent
Insider risk market abuse
The huge leverage
Junk bonds
Distressed companies
The herd effect
Bubble (LTCM, AMARANTH)
Only upper 1/10 ? Average below
The return?
The jobs?
Management buy-out Job cuts
Short term, increased return
More leverage
Weaker companies
Lets turn the trend!
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Dont wait for the ideal global solution!
Dialogue with all stakeholders incl. ETUC!
The Europeanapproach
They wont go offshore
EUs largest economy US
Disclosure
Transparency
Accountability
Reporting
Financial stability
Monitoring
Regulation
"Our" pension funds
New ethical claims (Cal STRS, Norway)
Protection
Transparency
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It is about changing behavior
Healthy companies
Protection
Max. leverage
Min. net worth
Tax reforms
Max. Extradividends
Societies revenue
Tax policy reforms
Member states, Europe, US
Social responsibility cohesion
CSR
Decent work
Fees
Stock options
Executives pays
New Social Europe is still there!
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Imagine Our way
Real business
A new understanding
Workers
A common way
Venture capital
Main road?
Strong incentives
Private equity
Patient, strong financing SMEs (Gazelles)
1 trillion to be financed fair market
1 trillion for NSE
London City or
No elimination
But better financial cities
Frankfurt or
Paris or
Loans/debt for real investment
Our way
Companies not just a financial product