Bernard Ginns: what role does private equity play in Red Ed’s world?

THE LAUNCH of a new campaign yesterday to demonstrate the impact that private equity and venture capital has on the UK had me wondering if the buyout industry is getting a little nervous at the prospect of a Labour-led Government.

Polling experts calculate that Labour leader Ed Miliband has a two-in-three chance of being Britain’s next Prime Minister. And that likelihood is giving plenty of business leaders pause for thought.

This is the man who promised to bring an end to “fast buck” capitalism, tackle asset-stripping “predators” and give workers the statutory right to request employee ownership when their businesses change hands. The last one alone could be enough to kill off many management buyouts if enacted.

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“I would not say we are nervous about a Labour government,” Simon Horner, director of policy and public affairs at the British Private Equity & Venture Capital Association, told me. The BVCA is behind The Investment Agenda campaign. “This is an attempt to educate all the wider political classes,” he added.

The BVCA research shows that private equity and venture capital have more than £30bn invested in 2,200 British companies, which together employ more than 800,000 people.

In Yorkshire, private equity has invested more than £1.1bn in 40 companies with a total headcount of nearly 17,000 people.

Venture capitalists are backing 93 companies in the region, employing more than 5,800 people and providing £294m in investment.

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Mr Horner said: “You are right to suggest that we aiming this at Labour to some extent, mainly because they are the party of opposition.

“We want to reiterate to them the message that we have been putting to the current Government that private equity and venture capital makes a really significant economic contribution to the UK.”

The industry has had its fair share of bad news stories though. Care home operator Southern Cross, parcels firm City Link and retailer Phones4U have been touted as examples of private equity ruthlessness.

Mr Horner said: “We are not perfect by any means. We are not saying we have a 100 per cent track record. We don’t get it right all the time.

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“The challenge of this project is to showcase some of our successes, because there are many, many more of those than there are Southern Crosses.”

Mr Horner said Mr Miliband’s comments about the private equity industry so far have amounted to rhetoric rather than any specific policy prescriptions.

He added that the BVCA has not seen anything from Labour that suggests private equity “should not be a part of the landscape”.

I asked the Labour Party press office to set out its position on private equity and venture capital. No response was forthcoming.

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The BVCA said it will step up its campaign over the coming weeks, highlighting investment in skills and apprenticeships, communities and exports.

Tim Hames, director general, said: “Business and investment is already emerging as one of the key battlegrounds on which the General Election will be fought, and for good reason.

“The future prosperity of the UK economy is dependent upon its ability to attract and encourage investment. In order to compete on the world stage, the country needs companies to grow, entrepreneurship to be stimulated and innovation funded.

“Private equity and venture capital has a proven track record of doing just that and The Investment Agenda is our platform to demonstrate it.

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“As a nation of enterprise, the UK has a long and proud history.

“Now, with the rapid improvement of the economy, there is an opportunity to build on this and take the country to even greater success.

“Investment will be key to this, and private equity and venture capital will have its part to play.”