Private equity moves to fend off criticism

Source: Exec Digital UK

Date :17/07/2007 13:18:18

The private equity industry has outlined a series of measures aimed at more transparency as it tries to fend off mounting political criticism.

A report by Sir David Walker has made recommendations on how firms disclose financial information and communicate with staff in businesses they own.

Suggestions include firms publishing annual financial reports and outlining their sources of funding and profits.

Unions have accused private equity firms of paying too little tax and asset-stripping after firms they own such as the AA and Bird's Eye shed thousands of jobs. Unions welcomed parts of the report but said it did not address workers rights.

Sir David said there were some "defects" in how private equity-owned firms communicated their methods and aims with staff, unions and the "wider public interest".

"There is a lot of opacity to be addressed," he said.

The recent £11bn takeover of Alliance Boots by a private equity consortium prompted calls for the industry to be more open about how it funds large takeovers.

Critics have questioned the viability of its dependence on high levels of debt.

Private equity bosses were grilled by MPs last month, where they were forced to defend their record on running businesses and tax incentives used by the industry.

Sir David, a former Morgan Stanley executive, was appointed by the British Private Equity and Venture Capital Association to make recommendations about corporate governance which could form the basis of a voluntary code of conduct.

July 17 2007