Private equity predators spend close to £100bn plundering British companies since start of coronavirus pandemic
- Buyout barons have taken over 1,206 firms including Morrisons and G4S
- ‘Pandemic plundering’ has sparked a backlash from MPs, bosses and investors
- Critics warn of private equity owners axing jobs and loading firms with debt
Private equity predators have spent close to £100billion plundering British companies since the start of the pandemic.
The buyout barons have taken over 1,206 firms including household names from Morrisons to G4S, according to data from Refinitiv.
The ‘pandemic plundering’ has sparked a major backlash from MPs, bosses and investors who claim overseas predators are robbing Britain of some of its best companies.
And critics have warned the spree could have long-term consequences, as ruthless private equity owners axe jobs and load firms with debt.
Labour MP Dame Margaret Hodge, former culture minister, said: ‘Most come in for a short-term gain by asset-stripping companies, loading them with debt and then exiting. In the medium term there’s no benefit to the UK economy, and there may indeed be loss. This will cost us jobs and future growth.’
Since the pandemic hit last year, 1,206 firms worth £92billion have been snapped up by private equity. This year 773 deals were done, worth a total of £63billion, up from 461 in 2019. The biggest was Clayton Dubilier & Rice’s £7billion deal for supermarket Morrisons.
Asda’s buyout by the Issa brothers was also backed by US private equity firm TDR Capital. And Signature Aviation was scooped up by a consortium led by American titan Blackstone, run by billionaire Stephen Schwarzman. It also snapped up property firm St Modwen.
Private equity titans are only interested in maximising profits over the time they hold the companies. This can destabilise in the long term.
So-called ‘leveraging’ has proved disastrous in past deals. The AA nearly collapsed last year under a debt pile. Its rescuers, ironically, were buyout firms Towerbrook and Warburg Pincus.
And Debenhams, which finally closed last year, built up a suffocating debt pile. As early as May this year, the Mail raised concerns that rapacious private equity outfits were buying firms cheap.
In some cases, private equity, usefully, provides cash for expansion. Kurt Geiger and Worldpay have been successes.
Tory MP Kevin Hollinrake said: ‘You want to see businesses run for the long term, not to make a quick buck.’
In the Mail this year, Lord Heseltine said the UK was one of the only developed economies not to look at whether takeovers were in the national interest.
Hodge said: ‘It’s urgent that the Government and Parliament take a strategic look at the impact of the activity of these companies. Britain cannot maintain this laissez-faire attitude.’