Damon Buffini, head of European buyout firm Permira, has publicly defended private equity for the first time, as the GMB, a trade union at the centre of the recent attacks on the industry, continues its public criticism of him and his firm.
He said: “We’re in the business of creating strong long-term competitive businesses…that’s in the best interests of all stakeholders, especially employees. In a global economy, there’s no job security unless a business is profitable and sustainable – and that’s what we’re doing.”
This could mean taking difficult decisions, he added. “Sometimes you have to take one step backwards to take two steps forwards.”
Buffini cited two Permira growth stories – UK retailer New Look, which he said had added a million square feet of extra retail space under the firm’s ownership, and Travelodge, which has opened 100 new hotels. “These are now strong businesses that employ thousands more people,” he said.
He acknowledged that, as an industry, “we have to be more open.” However, he said there was “a perception and reality issue” over accusations of a lack of transparency, pointing out that the AA produced a much more detailed annual report under Permira’s ownership than it ever did under Centrica, a UK power utility.
Buffini also disputed suggestions that the industry charged excessive fees to investors. “Our investors are some of the most sophisticated pension funds in the world. 90 percent of them have been with us for the last ten years – they clearly think it’s good value for money, and if they don’t, they vote with their feet. I think they’re happy with what’s happening.”
Two contenders for the post of deputy leader of the Labour party have also suggested there should be a change to the tax regime, which offers an advantage to leveraged businesses. Buffini said in response Permira’s portfolio companies do not enjoy any special rules and to change the tax regime would damage the productivity of the whole UK.
The GMB, which has targeted Buffini personally as part of its campaign – had suggested in advance that the Permira head would use the interview to “attack” the GMB. However, Buffini merely said mildly that the GMB’s personal attacks, which included bringing a camel to his local church, were “not very constructive… and perhaps not the right way to go about it.” He said meeting face-to-face to discuss the issues would be a more constructive approach.
A press spokeswoman for the GMB told PEO yesterday a meeting was going to happen some time in March. However, the GMB is yet to respond to Buffini’s recent invitation, PEO understands.
GMB national secretary Paul Maloney also spoke on the programme. Maloney said the AA’s profits had been boosted by cutting jobs and worsening service, all at a greater cost to the British motorist. “That’s speculation, not investment,” he said.
When asked whether personal attacks on Buffini were an appropriate way to conduct a campaign, Maloney said: “As head of the company, reportedly taking home £30 million to 40 million per annum, he has take the flak that goes with it.”