Bain co-founder to colleagues: Don’t blame Mitt

September 21, 2012, 4:38 AM UTC

Geoffrey Rehnert, a co-founder of Bain Capital along with Mitt Romney, is second from the right.

FORTUNE — A former partner of Mitt Romney says the presidential candidate may have given the private equity industry more exposure, but he didn’t give it its bad rap. He also sought to defend Romney’s record at Bain Capital, the private equity firm the former governor of Massachusetts ran before getting into politics.

Speaking at the Dow Jones Private Equity Analyst Conference on Thursday in New York, Geoffrey Rehnert, who along with Romney founded Bain in 1984, said the firm created “a net hundreds of thousands of jobs” while Romney was there. Rehnert also said that the firm’s business ethics were very high under Romney. “We were seen as boy scouts,” says Rehnert. “We would come down to Wall Street and Joe Perella and bankers like him would pat Mitt on the head and say, ‘Aren’t you guys cute.'”

Many of the deals Bain is being attacked for happened after Romney left the firm, Rehnert said. Rehnert, who is pictured holding money in his teeth along with Romney in an infamous picture of the Bain founders, left Bain shortly after Romney. He is now the co-CEO of private equity firm Audax Group.

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Rehnert, who spoke on a panel titled “Romney’s Run: Why the PE industry will never be the same,” agreed the private equity industry is changing and under pressure, but he said that had nothing to do with the presidential campaign.

Rehnert said law makers lumped private equity into Dodd-Frank reforms even though it had nothing to do with the financial crisis. He also said unions and advocates for higher taxes had private equity in their sights long before Romney decided to run.

Rehnert says there is a going to be a shakeout in the private equity industry, but that has more to do with lower returns and a proliferation of funds, not Romney. What’s more, Rehnert says he doesn’t think the press from the presidential campaign is going the make investors less interested in private equity.

“Investors are being more careful who they put their money with in general. They want returns, but they don’t want to be embarrassed,” says Rehnert. “The industry was going to be under pressure regardless of what is happening with Mitt.”

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Romney in the past has said that Bain created 100,000 jobs while he was at the firm. Some have questioned that number.

Silver Lake’s Gordon Goldstein, who was also on the panel, said the private equity industry should talk more about its returns, which he said have been better than most other asset classes. He also said that it’s important to also point out that much of those returns go to public pension funds, which are the largest single investors in private equity. “States need us,” says Goldstein.

Other panel members, which also included Steve Judge, who heads the Private Equity Growth Capital Council, and Kate Mitchell, a managing director at Scale Venture Partners, agreed that the tax scrutiny of the private equity industry isn’t likely to go away. They all thought carried interest and other legal maneuvers that allow private equity executives to pay lower tax rates could be part of coming corporate tax reform, no matter who becomes president.

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Rehnert said the private equity industry’s corporate raider image is long outdated. Still, he said it was the industry not Romney’s job to change that reputation. “Mitt is an incredibly capable guy,” says Rehnert. “He’s just got a lot of things on his plate right now.”