As UK private equity engages with its critics, senior politicos have thrown their weight behind the industry.
The most high-profile intervention in recent weeks has come from none other than British prime minister Tony Blair, who has publicly praised private equity's positive effect on the country's economy.
Also supportive has been Ed Balls, a key ally of Prime Minister-in-waiting Gordon Brown and a potential future Chancellor of the Exchequer should the Labour Party remain in government after the next general election. In a recent interview with the Financial Times, Balls underlined that more disclosure would be welcome, but also stressed that private equity-driven innovation in the British economy was a good thing, and dismissed claims that the industry was “shorttermist” in its approach to running portfolio companies.
Balls' views on private equity contrast with those held by other senior figures in the Labour Party. Several of the candidates for Labour's upcoming deputy leadership election, including Peter Hain and Jon Cruddas, have called into question the tax treatment of private equity and its record on job creation. Some industry practitioners believe that this schism within Labour is the main reason why private equity has been so fiercely attacked by left wing politicians and trade unionists in recent weeks.
Meanwhile, over at Conservative Party headquarters, the Tories appear to be more uniform in their support of private equity. None of Britain's largest probusiness party's Members of Parliament have so far criticised the industry publicly. What's more, George Osborne, UK Shadow Chancellor, made it clear during a keynote speech at a BVCA dinner in March that private equity could count on him should his party make it into office.
To be fair, Osborne did qualify his support slightly by saying that private equity needed to be more transparent, take its social responsibilities more seriously and do more venture investing.
The latter appeal seemed a bit silly: UK private equity owes most of its success to the London-based buyout funds, and these funds won't even think about expanding into venture capital. But the BVCA grandees present at the dinner didn't seem to mind: judging by his remarks on the night, Osborne is fully signed up to the private equity cause – and as far as industry professionals pondering the future are concerned, surely that is all that matters.
GLENALTA FOUNDERS QUIT FOR CAPITAL DYNAMICS
Andrew Beaton and David Smith, the two founding partners of European co-invesment firm Glenalta Capital, have joined Swiss asset management firm Capital Dynamics. Both will be managing directors in the firm's London office, and Smith will also be on the firm's investment committee. Beaton and Smith had only been at Glenalta for a year, having previously founded another co-investment business, GE Equity Europe, where they completed more than 40 deals. Beaton was also been a founding partner of Langholm Capital, the Unilever-backed mid-market buyout firm.
GRESHAM BOLSTERS TEAM
Gresham, a London-based mid-market private equity firm, has hired Iain Wolstenholme as investment director and Peter Lahoud as research and origination manager. Wolstenholme, who previously worked at Ernst & Young in the corporate finance division, will be based in Manchester. Lahoud was previously a consultant at Library House, a Cambridgebased research and data services company, where he specialised in private equity deal origination. He will work alongside Gary Ward in Gresham's deal origination team, and will be based in London. Gresham recently backed the £48 million (€70.5 million; $92.5 million) buyout of Town Centre Restaurants, one of the UK's largest privately owned restaurant groups.
GULF FINANCE APPOINTS HEAD OF UK PE UNIT
Islamic investment bank Gulf Finance House has launched a London-based private equity division to be headed by Joe McGrane. The division will invest on a deal-by-deal basis in mid-market companies across the UK. It expects to invest between £50 million and £200 million (€38 million to €152 million) in each deal, and is expecting to complete two to three transactions a year. The bank will finance the deals from its own balance sheet. McGrane was previously managing director at Royal Bank of Scotland Development Capital, and has been a director at both 3i and Charterhouse Development Capital. Founded in 1999, Gulf Finance House has about $1 billion under management.
SIGULER GUFF HIRES CAMPBELL LUTYENS PARTNER TO HEAD NEW LONDON OFFICE
US private equity firm Siguler Guff has appointed Eric Estes as managing director for its new London office. His mandate is to build from scratch the firm's European operations. Estes was previously a partner at transatlantic private equity advisory firm Campbell Lutyens. Founded in 1991, Siguler Guff has about $3.6 billion (€2.7 billion) under management. It has offices in New York, Boston, London, Moscow, Kiev and Shanghai, and targets distressed debt and emerging market investment opportunities.
MITHRAS HIRES GILLIAN BROWN TO HEAD FUNDS OF FUNDS
UK investment trust Mithras has launched a new funds of funds business headed by Tandem Private Equity founder Gillian Brown. Mithras bought Tandem, itself a funds of funds business, in January. The establishment of Mithras Private Equity is the latest step in the investment trust's transformation. It has moved away from mezzanine investments to equity investments, and has more than doubled its share price in the last four years, with a net asset value increase of 82 percent. Brown previously headed the funds of funds businesses at Hermes Private Equity and Merrill Lynch Private Equity Partners.
ICG APPOINTS HEAD OF DEBT INVESTOR RELATIONS
UK mezzanine firm Intermediate Capital Group (ICG) has recruited Janine Peake as head of debt investor relations. Peake previously held the equivalent position at insurance company Financial Security Assurance. ICG has raised three European mezzanine funds, including the €1.5 billion ($2.9 billion) 2003 fund, an Asia Pacific fund, six CDO funds and a Credit Opportunities fund. It is currently fundraising for ICG European Fund 2006, which held a first close in November last year on €650 million, and which has a target of €1.25 billion.
IAIN WILCOCK LEAVES QUESTER
Iain Wilcock has left UK venture capital firm Quester, where he was in charge of the firm's life sciences and healthcare investment activities. He has been replaced by Jonathan Gee, an investment director in the life sciences team. Before joining Quester, Wilcock spent ten years as chief executive of Imperial College Innovations where he oversaw the spinout of more than 30 start-up companies and the university's first seed fund. London-based Quester manages more than £200 million (€293 million; $387 million). It recently bought UniServity, a provider of web-based learning platforms, for £2.4 million.