Spotlight on private-equity spoils

Peter Linthwaite's resignation as chief exec of the British Private Equity and Venture Capital Association seals another week of high drama for the industry. The amount of coverage the sector has had over the past five days is more akin to Big Brother than high finance - and that's without any major deals even going ahead.

Last Updated: 31 Aug 2010
First there was the publication of Blackstone Group's accounts, which made visible for the first time what we'd always known: that these companies are raking in a shedload of cash. We learnt that co-founder Peter Peterson stood to make $1.9bn from the deal - not bad for an 81-year-old - while chief exec Steve Schwarzman would pocket around $450m and still retain a $7.7bn stake. Kerr-ching.

Then the Treasury Select Committee got stuck into the industry, savaging Linthwaite's performance along the way. And even those inside the sector had a rare dig. Last week it was SVG head Nicholas Ferguson, pointing out that equity chiefs pay less tax than cleaners; and this week Apax founder Sir Ronald Cohen came out arguing for the tightening of tax loopholes that the industry has been exploiting.

You can't really blame Linthwaite for jacking it in. His post must have been comparatively cushy when he took it on two years ago, heading up the trade body for what was then a relatively esoteric and mystery-shrouded industry. But thanks to recent high-profile moves, such as the acquisition of Alliance Boots and the pursuit of Sainsbury's, the wave of government and public criticism has made it one of the toughest positions out there.

As an example of how untenable it is, even the trade unions managed to score a rare victory in the private-equity PR war. Brendan Barber said the current spate of private-equity deals meant employees were ‘bought and sold like the cheapest chips at the edge of a roulette table'. Coming off second-best to the unions was perhaps the final straw for Linthwaite…

Find this article useful?

Get more great articles like this in your inbox every lunchtime