Damon Buffini: The unassuming face of the new capitalism

The name may mean little but the investment revolution Damon Buffini leads has changed the lives of millions. Guy Adams on one of the UK's most powerful and controversial businessmen
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Damon Buffini is the most important person you've probably never heard of. Aged 43, he is the managing partner of Permira, Europe's biggest private equity firm. He lives in Wandsworth, works in the City, and looks, to all the world, like a normal member of the pin-striped professional class.

Looks can be deceptive, though. Buffini is an outgoing father-of-two, who enjoys a pint and plays football at the weekend. Yet he also boasts staggering power and influence, together with a personal fortune of about £100m. And this week, he was thrust to the centre of an extraordinary political row.

In a letter to the GMB trade union, Buffini offered himself as chief public negotiator in an increasingly bitter dispute over the secretive private equity industry. One way or another, its outcome will now shape the future of Britain's booming financial sector.

To many within the City, that makes him a heroic figure: an inspiring captain of industry who has risen from a humble background to become one of the most powerful men in finance.

Yet to a growing number of trade unions and Labour MPs, it means something entirely different: Buffini, they say, is an uncaring symbol of a money-grabbing trade. Behind that rugged smile lies the unacceptable face of modern capitalism.

"He isn't just another fat banker," says one former colleague. "He's actually now a spokesman for the entire industry. In fact, it's no exaggeration to say that Damon Buffini has probably just become the most powerful black man in Britain."

To understand how that came to pass, it's necessary to appreciate the extent to which private equity now dominates British industry and has fuelled the current City boom.

Although most Britons would struggle to explain how the notoriously opaque world works, one in five private sector workers (by some estimates) are now employed by companies owned by private investment houses.

No firm is too big to be affected. Several private equity companies currently have Sainsbury's in their sights. Permira, for its part, has in recent years purchased such household names as the AA, New Look, Homebase and Bird's Eye.

Rows about asset-stripping often follow. Permira's buyout of the AA two years ago sparked a bitter industrial dispute over redundancies. The GMB - Britain's third biggest union - fought back by seeking to trash the reputation of Buffini and his firm. So began Buffini's rise to public prominence.

"Before we found out about Buffini, he was a hidden man," says the GMB's Paul Maloney. "He'd just made thousands of people redundant but nobody knew about him. He was the spirit behind the evil, as it were. So we decided to make him the focus of our campaign."

The result was a deeply personal attack. One summer morning, they picketed Holy Trinity Church in Clapham, where Buffini and his family worship, with a camel. A few months later, they handed out sickbags at a charity fundraiser he'd organised.

"He's a devout Christian, so we decided to highlight the quote from the Bible about a camel going through the eye of a needle. We wanted to portray him as a hypocrite, because that's what we think he is," said Mr Maloney. Newspaper adverts were taken out, "naming and shaming" their target. A Labour MP, Gwyn Prosser, accused him of "greed" and "blatant asset stripping" in an Early Day Motion. More recently, Labour MPs were asked to campaign for an end to tax reliefs on borrowing enjoyed by Permira.

On Wednesday, Buffini cracked. Enough was enough, he said. In an open letter, he invited the GMB's general secretary, Paul Kenny, to clear-the-air talks aimed at ending "confusion" about the way Permira and other firms operate. "We are committed to having an open and constructive relationship with trade unions," it read. "I would therefore appreciate the opportunity to speak to you directly about any concerns you might have, and explain in detail the work that we do."

For a private equity boss, it was an astonishingly bold move. Unlike PLCs, firms such as Permira are not governed by stock-market rules regarding openness. They are opaque, secretive organisations that, until now, have eschewed public relations in favour of the serious business of making money. But if the industry is to survive, Buffini believes that it must be prepared to stand up and defend itself. He therefore volunteered, as one of its leading lights, to be the one that does the shouting.

"Hats off to the GMB: until now, they have run a strong campaign," says a colleague at Permira. "Twelve months ago, they found this angle to go at, and exploited it well. They did the camel thing, and handed out sickbags, and took out some frankly unpleasant adverts in the Evening Standard, saying 'Damon Buffini sacks disabled people'. They wanted to get Damon riled. He could have come out this week and given lots of interviews attacking the GMB. But he actually wants to sit down and articulate where we stand. That's his style."

Buffini certainly has the perfect pedigree to defend the City, whose excess has become the subject of increasing public debate. He is no Etonian toff with red braces. Instead, his is a classic, classless tale of rags-to-riches.

He was brought up on a tough Leicester Council estate. His father was a black American serviceman who was never part of the family. His mother, Maureen, toiled at a local hotel to put him through grammar school.

From there, Buffini won a place at St John's College, Cambridge. He graduated in 1984, and became a management consultant, before winning a scholarship to Harvard Business School.

He subsequently rose through Schroeder, one of the first City firms to promote what are known as leveraged buyouts. When the firm sold off its private equity wing in 2001, it was bought by a management group and renamed as Permira.

The firm swiftly became the biggest UK player in a snowballing industry. Buffini, as its head, is now one of the most important men in the City. At just 43, he's likely to remain so for the next 25 years.

Yet until recently, only close colleagues had the slightest idea what he was actually like. That changed when PR agency Bell Pottinger was bought in to help repair Permira's tattered image. Buffini is now portrayed as a relaxed individual, who dresses snappily, drinks bitter and is devoted to wife Deborah, a solicitor, and children.

Friends say he calls people "mate", supports Arsenal, and play tennis and golf. Much is also made of his recent efforts to set up charitable foundations, and support social enterprise. He is, if you like, the very model of a New Labour millionaire.

"Damon's a very gregarious person," says a friend. "He's out a lot, having dinners, or going to drinks parties. He's not a recluse. He never tried to be secretive. It's just that it's only relatively recently that people have actually been interested in him."

You also get the feeling that Buffini's determination to fight his corner may be mirrored across the City, which has recently been under sustained attack - notably by Northern Ireland Secretary Peter Hain - over the size of bonuses.

"There is a new trend for people to stand up and be counted," says one colleague. "Remember the NatWest Three case, where a load of financiers marched on Downing Street? You could argue that Damon's sticking his head above the parapet in a similar spirit."

Whether the unions will buy that is another matter, though. "Wherever Damon Buffini goes, we will follow," adds Mr Moloney. "Wherever he pops up giving a pound to charity, we'll be on his case. The GMB has been around for 120 years. We were there before Private Equity existed, and we will be there after it has gone too."

What is private equity?

* WHAT IS IT? Private equity investors buy companies using a mix of their own and borrowed money, then try to make them more profitable before reselling them. In the meantime, the companies in question cease to be publicly traded and are, in effect, privately owned.

* WHY IS IT IMPORTANT? One company in three that is sold in the UK is bought by private equity; outside the public sector, one British employee in five works for a company owned by private equity. In the past 25 years, the UK industry has grown from almost nothing to some 200 companies doing deals worth more than £20bn a year. Private equity deals in Europe had a value of £118bn last year - up 41 per cent on 2005.

* WHY THE FUSS? Companies that are owned by private equity are less accountable than public companies and do not have to meet the stringent stock market disclosure rules. Advocates of private equity say that makes them more flexible and better able to take difficult decisions. However, critics say that it can lead to a culture of profiteering and asset-stripping.