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Private equity head hits back after attack by buyout pioneer Moulton

Nick Clark
Friday 29 February 2008 01:00 GMT

The head of Britain's private equity association has hit back at criticism from the buyout pioneer Jon Moulton, calling for the industry to present a united front as it works to leave behind its "bad guy" image.

Simon Walker, the chief executive of the British Venture Capital Association, went on the attack yesterday against those who had publicly criticised private equity companies and the trade body itself. "There are enough enemies of capitalism attacking us without the occasional blast behind our ranks," he said.

Mr Walker warned that any such careless remarks could spark long-term repercussions: "Today's headlines or clever quote might be tomorrow's tax rise or extra piece of regulation."

The barbs, made in a speech on the last day of the industry's showpiece conference in Munich, were interpreted as a thinly veiled attack on Mr Moulton, the founder of Alchemy Partners.

Mr Moulton had delivered the opening address for the Super Return International conference on Tuesday. The industry grandee trained both barrels on what he called the "enemies" of private equity – from the media and trade unions to politicians and hedge funds – before launching a surprising attack on the BVCA.

He criticised the trade body for using "dodgy" statistics to paint private equity in a misleadingly positive light. "We shouldn't use flaky statistics to show an over-optimistic image," he said.

Mr Walker, a former press secretary to the Queen, said the BVCA stood by its research but did admit the numbers were not perfect. "We need a lot more data, and it's my job to see that it happens."

He said in his speech he had agreed to take charge of the BVCA in November partly because "I like a fight", although it was unlikely that he expected to come up against members of the industry the association represents. However, he moved to defuse a potential row with Mr Moulton, saying relations were "perfectly friendly". He added: "I would love to involve him in our research."

The private equity industry has been forced into the limelight over the past two years as the deals grew in size to include household names such as Alliance Boots. It became the focus of anger from trade unions and politicians who bandied around terms like "locusts" and "asset strippers" who pay less tax than their cleaners. This culminated in high-profile members of the industry being called to explain themselves to the Treasury Select Committee.

Since the credit crunch last year, the debt to finance deals has dried up. Disquiet over private equity has since receded, providing an opportunity for the industry to straighten itself out, said Mr Walker, who added that buyout funds were now perceived as "last year's bad guys". "When the rain stops, it's time to fix the roof," he said. Let's get our act together now, and not wait for the next monsoon, because it certainly will arrive."

Trying to organise private equity companies was like "herding cats", he said, but added: "Long may it continue, because individuality is one of the reasons why private equity is so successful."

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