Live stripper on Radio 4
Posted on February 23, 2007 by Richard Beddard
Filed Under Investing |
Quote of the day: Damon Buffini, the rags-to-riches head of Permira, defending private equity against charges of asset stripping:
You only have to look at the UK car industry to understand that if you don’t take action to put a business on a firm footing, things can go badly wrong. So we believe you sometimes have to take a step backwards before you take a step forwards. Clearly we do that in the belief that the business will then grow, employment will rise and the companies will become stronger.
Hitherto microphone-shy, Mr Buffini gave interviews to Radio 4, and FT.com, this morning. Brushing aside the fees Private Equity firms take out of the businesses they run, he said investors, mostly pension funds, “clearly think they [private equity funds] are good value“:
There is no doubt our investors do benefit from the success of private equity. That’s why they are putting more money into it. So pensioners are benefiting from private equity’s success. But there’s no prize for failure in our business. If we don’t provide… returns for our investors, and we do that by creating strong companies that are competitive and productive in the UK economy, then they won’t invest in us again.
Following a campaign of harassment that included parading a camel outside his church, Mr Buffini wrote an open letter to union leaders requesting a meeting to “set the record straight“. The GMB union says companies like the AA and Bird’s Eye, and especially their employees, are suffering under private equity.
I have my doubts too. Next week I’m talking to Guy Fraser-Sampson, author of Private Equity as an Asset Class. Hopefully he can lay the industry bare for us.
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