Saving jobs

Bill Jamieson (Between the Lines, 13 April) is too experienced a journalist to trot out tired clichés about excessive debt, asset stripping and job losses which demonstrate a fundamental misunderstanding of today's private equity industry.

Private equity in 2010 is not characterised by mega-deals bought with cheap debt. Rather it's about scores of medium-sized manufacturing and retailing businesses employing hundreds – sometimes thousands – of workers who would have lost their jobs if private equity investors hadn't been prepared to put capital into rescuing firms otherwise doomed to fail.

This week, one of private equity's best known exponents, Jon Moulton, bought out of administration the UK subsidiary of the Reader's Digest. His Better Capital has pledged the 100 staff will keep their jobs and that it will invest in the company to restore its fortunes.

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Last month, Endless Private Equity of Leeds sold DavyMarkham in Sheffield to an Indian conglomerate in exactly the kind of deal Bill Jamieson wishes to block. Founded in 1830, DavyMarkham is the kind of heavy engineering firm we are sometimes told this country has pulled the plug on. They built the roll-on bridge for the ferries at Dover and the doors for the nuclear shield at Sellafield.

Five years ago, DavyMarkham was on the road to oblivion. Owned by Norwegian firm Kvaerner, it had been losing money for 20 years. No-one wanted to buy it. Even 22 acres in the middle of Sheffield didn't spark any interest. Managers were engaged with explicit instructions to see if anything could be done, if a buyer could be found and if not to close it down. Endless bought it and began a turnaround.

There are plenty of parts of Britain that would be looking at economic decline and steeper unemployment figures if it hadn't been for private equity.


Chief executive

British Private Equity and Venture Capital Association

Lancaster Place, London