The number of people employed by UK private equity-backed companies increased by an average of 8 percent per annum worldwide in the five financial years up to April 2007, according to a report by industry body the British Private Equity and Venture Capital Association.
Employment at FTSE 100 companies increased by 0.4 percent and at FTSE 250 companies by 3 percent per annum during the same period.
Private equity firms employ approximately 3 million people in the UK, equivalent to 21 percent of UK private sector employees.
The analysis is more favourable than that by an independent review commissioned by the World Economic Forum, which painted a confusing picture. It found private equity firms’ initial period of acquisition led to a 7 percent job loss in comparison with other companies. However, the report also said firms compensated with 6 percent higher creation of new jobs following a buyout.
Wol Kolade, chairman of the BVCA, said: “[The industry’s rapid growth] has provoked debate. We welcome that debate, so long as it is based on fact. Sadly too many of the criticisms we have faced are based on fiction. We need to do more to explain how our industry works, as transparency builds trust.”
The report also found that private equity-backed companies’ sales rose by 8 percent per annum in comparison to 6 percent at FTSE 100 companies and 5 percent at FTSE 250 companies.
Private equity exports grew by 10 percent per annum compared with a national growth rate of 4 percent and private equity corporate investment rose 11 percent compared to 3 percent nationally. Also firms’ research and development increased 14 percent in comparison to national growth of 1 percent.
The BVCA’s two-pronged attack on “fictions” about the industry continues apace with the appointment of a monitoring group to oversee the Walker transparency reforms. It has 25 signatories to the Walker initiative. Yesterday the BVCA revealed 23 firms pledging compliance but today has updated the list to include European buyout firm BC Partners and global buyout firm Warburg Pincus.