Buffini to lead UK Treasury review on patient capital

The initiative will aim to address the lack of long-term investment in British businesses.

Industry pioneer Damon Buffini, former managing partner and chairman at global buyout house Permira, has taken on a new role as advisor to the British government.

In a speech on Monday at the annual CBI Conference, UK prime minister Theresa May announced that Buffini would be chairing a panel of experts which will support a review into what’s behind the lack of long-term investment in British businesses.

May said while the UK ranks third in the OECD for the number of start-ups it creates, the country is only 13th when it comes to those that go on to become scaled-up businesses.

“I want us to turn our bright start-ups into successful scale-ups by backing them for the long-term. To do this we need to better understand where the barriers are, so I am pleased to announce we will launch a new Patient Capital Review – led by the Treasury – that will examine how we can break down the obstacles to getting long-term investment into innovative firms.”

Recent changes to VCT legislation introduced as part of the 2015 Finance Bill in the UK have made it harder for fledgling companies that have outgrown seed funding to continue to grow.

The changes prohibit VCTs from funding management buyouts and acquisitions, and also stipulate that companies must have made their first commercial sale in the past seven years, or 10 years for ‘knowledge intensive’ companies, to be eligible for VCT investment.

In March trade body the Investment Association unveiled an industry-wide ‘Productivity Action Plan’ to support long-term investment and seek “achievable remedies to the ills of some of the most serious causes of short-term thinking in the British economy”, the IA’s Andrew Ninian, director of corporate governance, said in a statement at the time.

Buffini stepped down from Permira’s investment committee at the end of 2015. Buffini, who joined the firm in 1988 when it was known as Schroder Ventures, was hired by Jon Moulton, who ran the British division at the time. He became partner in 1991, managing partner of the UK in 1999, and then managing partner of Permira in 2000.

In the run-up to the financial crisis, Buffini found himself in the firing line of trade unionists following job cuts at the AA, which Permira acquired alongside CVC in 2004 in a £1.75 billion (€2.1 billion; $2.2 billion) transaction. In 2006 the GMB union turned up outside Buffini’s church in south London with a camel, referencing a biblical passage in which Jesus says it is easier for a camel to pass through the eye of a needle than for a rich man to enter heaven.

Buffini was also questioned, alongside Philip Yea, a former 3i chief executive, and other private equity bosses, by a Treasury select committee in 2007 as part of an investigation into the activities of the private equity industry.