Increasing market regulation a step in the wrong direction, says private equity leader

Private equity investor Rami Cassis has warned that rising antitrust regulation in the US risks deterring private equity investment and could undermine the US’s spot as the top global destination for FDI if the trend continues.

Rami Cassis is the founder and CEO of Parabellum Investments, his family office which acts as a private equity firm. Through Parabellum Investments, Cassis acquired US-based Vantage Consulting Group in June this year, merging it into his existing portfolio company Advanco, making Advanco the world’s largest independent pharmaceutical serialisation solutions provider.

Cassis has strong intentions to strike new deals in the US, but says the Department of Justice and Federal Trade Commission’s proposed new merger guidelines on 19 July could have a chilling effect on deal volume in the sector.

The guidelines will be open to public comment for 60 days before final implementation and follow changes proposed in June to premerger notification requirements, which require significantly more information and documentation to be submitted as part of the premerger review process. By the Federal Trade Commission’s own estimation, the proposed changes could increase the time needed to prepare for a filing to 222 hours, from the current 30 to 40 hours.

These proposals follow in the wake of Biden’s sweeping 2021 executive order, aimed at curbing anti-competitive practices, which contained 72 separate measures spanning industries from technology to healthcare, which received strong push back from across the business spectrum.

Cassis believes increasing market regulation is a step in the wrong direction and may lead some private equity investors to think twice about investing if the trend continues.

Rami Cassis said: "The US remains the top destination for FDI, but its share of global investment shrank from 34 per cent in 2001 to 30 per cent in 2021, and recent signals on crackdowns from regulators risk further driving this decline.

“Private equity plays a leading role in driving investment into the US, but in the current environment of economic uncertainty, investors are looking for security. And while it is right that the US protects its interests and fair competition is essential, repeated news of new regulatory barriers will turn away many private equity investors.

“For example, the new merger guidelines that say antitrust agencies can consider a series of smaller acquisitions instead of focussing on an individual deal is a direct affront to private equity firms and will have a cooling effect on deal volume. We all want a competitive investment and business environment, but targeting private equity deals isn’t the way to achieve this.

“Furthermore, the workload and due diligence required in proposed changes could also make the US market less appealing, especially if more is expected to come. And while the US is still the most attractive market for private equity investors, burgeoning hubs like Dubai, Singapore, and Seoul could soon become increasingly attractive alternatives. This sends a worrying message to investors, and funds may turn away from the US in coming years.”

ABOUT RAMI CASSIS

Cassis founded Parabellum Investments, his family office and private equity firm, in 2012. Through Parabellum Investments, Cassis deploys his own personal capital. He usually acquires a controlling interest in businesses, where he provides CEOs and decision-makers with the tools, expertise, and strategies to drive organic growth – a pragmatic business philosophy taken from an extensive career in operations. His investments have spanned numerous continents, including North America, Europe, Asia, and Africa.

Rami has held a number of executive positions with corporations, including Operations Director, Chairman, CEO, and COO. Prior to this, Rami worked in line management with Atos, where he was Managing Director of BPO/ITO for the firm in the UK. He also had a brief consulting career with KPMG, as well as a 10-year career at Schlumberger, starting as an operating engineer before holding a succession of management roles. His current investments include automation firm Parseq, serialisation specialist Advanco, fintech company ieDigital, digital transformation experts MajorKey, and financial risk management firm Razor Risk.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes