A high-stakes private equity summit in Berlin, drawing participants representing over $50 trillion (€43 trillion) in assets under management, was met with fervent protests this week, as activists accused the industry of exacerbating inequality, driving job cuts, and inflating costs. The SuperReturn conference, a major gathering for financial actors seeking high returns, became the focal point for the ‘NoSuperReturn’ group, which staged a series of demonstrations across the German capital.
Confrontation at Wittenbergplatz
The protests kicked off outside the Wittenbergplatz subway station, where activist Hedda engaged passersby on the issue of inherited wealth. Citing an analysis indicating that only one in four German billionaires is self-made, Hedda questioned, ‘Which tax can the government use to fairly redistribute this excessive wealth generated by genetic lottery?’ The crowd’s response, ‘Inheritance tax!’, was met with cheers and the distribution of golden chocolate coins by the NoSuperReturn activists. The scene featured a massive banner, a polar bear in a pink cape, and a clear message against what they perceive as an unfair economic system.
The Mechanics of Private Equity Under Scrutiny
The core of the activists’ grievances lies in the operational model of private equity firms. These firms typically gather capital from pension funds, insurance companies, banks, and wealthy individuals. This capital is then used to acquire companies with the explicit goal of reselling them within three to five years, promising returns significantly higher than those typically found on the stock market. This profit generation is largely achieved through leveraged buyouts, where acquisitions are financed with approximately 30-40% equity and a substantial 60-70% debt. The private equity firm itself contributes only a small share, effectively ‘playing with other people’s money,’ as Rosemary Batt, a professor emeritus of human resource studies at Cornell University, observed.
Batt, who has studied private equity operations for over 15 years with her colleague Eileen Appelbaum, highlighted the inherent risk dynamic: ‘They’re taking risks with other people’s money. They win on the upside. They do not lose on the downside.’ To further boost investor returns, acquired companies often undergo significant restructuring, including staff reductions, asset divestitures, and the assumption of considerable debt.
Economic Impact and Sectoral Concerns
The conference panels at SuperReturn frequently centered on ‘extracting value and increasing returns.’ However, Batt contends that this approach can have detrimental effects on businesses, employees, clients, and the broader economy. ‘The profits from companies, from productive enterprises, are going into the pockets of financial actors, not being put back into companies to help them grow and be innovative and compete well in the economy,’ she told DW.
While private equity operates across nearly every market, its practices in the health and elderly care sector are particularly concerning, according to Batt. She noted that firms often ‘take out more than they invest.’ A case in point is Alloheim, Germany’s largest privately owned nursing home chain, which has been passed between multiple private equity firms—from Star Capital Partners to Carlyle Group, then to Nordic Capital. A planned sale by Nordic Capital was halted in 2024 due to difficult market conditions, illustrating the ‘exit backlog’ that was a frequently repeated concern at the conference.
Furthermore, Batt’s research challenges the industry’s promise of exorbitant returns. ‘The median fund has not beaten the stock market since the vintage year 2006,’ she stated. Her studies also indicate that companies subjected to private equity buyouts experience ‘around 20% higher bankruptcy rates’ compared to average publicly traded companies.
Volatility as a Strategic Advantage
Despite market challenges like the ‘exit backlog,’ a different perspective emerged from the SuperReturn panelists regarding market volatility. One panelist declared, ‘Volatility is our friend,’ pointing to new opportunities. Another likened recent years to the ‘Hunger Games,’ referencing the COVID-19 pandemic, Russia’s invasion of Ukraine, and tensions in the Middle East and the Strait of Hormuz.
The German defense industry was highlighted as a ‘bright spot’ for investors. According to the manager of a German private equity fund, the significant government funding currently available, expected to continue for the next 10 to 20 years, presents a boon. An American firm with decades of involvement in defense contracts reported tripling their invested money, underscoring the lucrative nature of this sector amidst global instability.
A Call for Systemic Change
As the conference progressed, the NoSuperReturn activists intensified their demonstrations. On the third day, they declared the area in front of the conference hotel a ‘toxic area,’ attempting to block attendees. Some wore yellow protective suits and gas masks, while others, dressed in business suits, lay on the road simulating victims of an economic system prioritizing profit over life. Police intervened swiftly to clear the area.
Dominik Lange, a spokesperson for the group, articulated their broader objective: ‘We want a shift in mindset. For an economy that ensures a good life for everyone.’ Their final protest involved around 200 people marching through the streets, creating noise, and featuring symbolic figures like a trio dressed as lobbyists, a dragon puppet, the polar bear with the pink cape, and three puffy elephants carrying a banner that read: ‘The elephant in the room: Tax The Rich.’ The sustained protests underscored a deep societal divide over wealth distribution and the role of financial institutions in shaping economic outcomes.
