Private equity voices fears if Labour wins power

BRITAIN’s private equity industry has become the latest to voice fears about whether a Ed Miliband-led Labour ­government would be more interventionist in business and risk driving ­investment away from the country.
Rob Lucas is the new chairman of private equity body the BVCA. Picture: ContributedRob Lucas is the new chairman of private equity body the BVCA. Picture: Contributed
Rob Lucas is the new chairman of private equity body the BVCA. Picture: Contributed

The new business broadside against the opposition leader follows last week’s political controversy when more than 100 corporate leaders signed a letter to a national newspaper claiming the Conservative-led coalition government’s economic policies showed Britain was “open for business”.

That praise was taken as a sideswipe at some of Miliband’s perceived anti-business comments and actions, including typecasting businesses as either “producers or predators” and signalling a major crackdown on controversial zero-hours contracts.

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Now the British Private Equity & Venture Capital Association (BVCA) has entered the fray with just weeks to go until the general election, claiming that Labour’s business interventionist “rhetoric” could erode the confidence of private equity players.

Simon Horner, director, policy and public affairs at the BVCA, said: “There has been a tone suggesting a certain level of interventionist attitude in Labour under Miliband towards business.

“They want to weigh in and pull the levers of the economy quite ­directly, which is a concern for lots of our ­private equity members.

“Private equity generally try to stay under the radar, they are apolitical. But London and the UK is responsible for over half the private equity deals in ­Europe.

“Private equity invests reputational as well as financial capital. They buy businesses outright and also take listed companies private. If the rug were pulled out from under them by a ­Labour department of business or some sort of new [Labour] business quango, that would be ­disturbing.”

It comes as Rob Lucas, managing partner and head of UK Investments at private equity giant CVC, took over last week as BVCA chairman for 2015-16.

The ­private equity and venture capital trade body cited reports that Labour is keen on a more “French” approach to takeovers, where that country’s government periodically vetoes foreign takeovers of perceived “national champions”.

Horner said: “It seems Labour would like similar powers here. But it sends out a mixed message to private equity and would-be investors and companies.

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“We have an open economy which is attractive to a lot of investors and people who want to raise money. If Miliband were elected that reputation would take a hit.

“We are not saying [our members] might completely change their minds on deals, but it could erode the perception that the UK is the leading private equity market in Europe.

“If you read about this chap [ie, Miliband] who wants to make the UK economy a bit more like France, that is not going to go down well with investors in businesses.”

The BVCA also questioned Labour’s plan to make it compulsory for people who have spent three months on a zero-hours contract to be offered full-time jobs. “Flexibility in the labour market is a great strength,” Horner said.

The private equity and venture capital industry invested £10.2 billion, ­including £47 million in Scotland, in 2013 – the latest year for which figures are currently available.

Fundraising in the sector in 2013 nearly doubled to £11.2bn from £5.9bn in the previous year.