Locust (private equity)
Encyclopedia
Locust is a pejorative
Pejorative
Pejoratives , including name slurs, are words or grammatical forms that connote negativity and express contempt or distaste. A term can be regarded as pejorative in some social groups but not in others, e.g., hacker is a term used for computer criminals as well as quick and clever computer experts...

 term derived from the German "Heuschrecke", which German
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

 politician Franz Müntefering
Franz Müntefering
Franz Müntefering is a German politician and industrial manager. He was Chairman of the Social Democratic Party from 18 October 2008 to 13 November 2009, a position he already held from 2004 to 2005...

 (from the social democratic SPD
Social Democratic Party of Germany
The Social Democratic Party of Germany is a social-democratic political party in Germany...

 party) created in the context of describing private investors, private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....

 funds and investment banks. The term has been popularized and is continually used in discussions critical to capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

 in Germany.

Origin

In 2004 Franz Müntefering demanded that his party take a critical position towards certain practices of private equity firms. In a speech in November 2004, he first associated private financial investors with locusts:
This metaphor was repeated several times by both official pamphlets of the SPD and by German media. In a political context "Heuschrecke" is established, being used mostly by the left-wing political parties.

Originally, none of the companies were named specifically. However, in 2005, the online news magazine stern.de
Stern (magazine)
Stern is a weekly news magazine published in Germany. It was founded in 1948 by Henri Nannen, and is currently published by Gruner + Jahr, a subsidiary of Bertelsmann. In the first quarter of 2006, its print run was 1.019 million copies and it reached 7.84 million readers according to...

 published an article with a list of companies, namely Apax, BC Partners
BC Partners
BC Partners is a private equity firm specialising in buyouts and acquisitions financing in Europe and the United States. The firm invests across all industries...

, Carlyle Group
Carlyle Group
The Carlyle Group is an American-based global asset management firm, specializing in private equity, based in Washington, D.C. The Carlyle Group operates in four business areas: corporate private equity, real assets, market strategies and fund-of-funds, through its AlpInvest subsidiary...

, Advent International
Advent International
Advent International is a global private equity firm focused on buyouts of middle market growth companies in Western and Central Europe, North America, Latin America and Asia...

, Permira
Permira
Permira is a United Kingdom-based private equity firm with global reach. The firm advises funds with a total committed capital of approximately €20 billion....

, Blackstone Group
Blackstone Group
The Blackstone Group L.P. is an American-based alternative asset management and financial services company that specializes in private equity, real estate, and credit and marketable alternative investment strategies, as well as financial advisory services, such as mergers and acquisitions ,...

, CVC Capital Partners
CVC Capital Partners
CVC Capital Partners is one of the top five largest private equity firms globally with approximately US$46 billion in funds focused on management buyouts...

, Saban Capital Group
Saban Capital Group
Saban Capital Group is a global private investment firm based in Los Angeles, California focused on media, entertainment, and communications investments. Formed in 2001 by Haim Saban, Saban Capital Group owns Saban Brands, part of Univision Communications, and part of Tiger Gate Entertainment...

, KKR, WCM
WCM
WCM may stand for:* Web content management system* West Coast Motors, Scottish bus operator* Woman Candidate Master, chess title* World Championship Motorsports, a Grand Prix motorcycle team...

, and Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...

.

In 2005 former US Secretary of Treasury John W. Snow
John W. Snow
| image=John W. Snow.jpg|imagesize = 250px| order=73rd| title=United States Secretary of the Treasury| term_start=February 3, 2003| term_end=June 28, 2006| predecessor=Paul O'Neill| successor=Henry Paulson| birth_date=| birth_place=Toledo, Ohio...

 criticized the debate and commented "I do not think in these terms.".

The stock exchange of Düsseldorf
Düsseldorf
Düsseldorf is the capital city of the German state of North Rhine-Westphalia and centre of the Rhine-Ruhr metropolitan region.Düsseldorf is an important international business and financial centre and renowned for its fashion and trade fairs. Located centrally within the European Megalopolis, the...

made Locust the "faux-pas word" of 2005..

While remaining a mostly German phenomenon, "locust" has increasingly been quoted in English and American media, such as in the New York Times, the International Herald Tribune
, and most recently in the FT and The Economist.
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