UK Prime Minister Tony Blair has mounted a defence of private equity, as it faces a growing chorus of critics.
He said the private equity firms play an ’important function’ in the economy, when asked if he shared the concerns expressed by Labour backbenchers and unions that venture capitalists were little more than asset-strippers.
’Britain is one of the number one places in the world for private equity and I think the private equity market brings a lot of benefits to our economy,’ Blair said at his monthly press conference, according to AFX.
’Now it is important that everyone behaves responsibly; but you have just got to be very careful of these issues, otherwise you end up in circumstances where concerns about maybe a minority of specific issues in specific circumstances end up tarring a whole sector, and I don’t think that would be fair at all.’
’Some of those who are private equity people or venture capitalists perform an important function in our economy, so we need to be careful,’ he added.
The revolt against private equity firms has gathered pace in the past two weeks, notably led by the GMB union.
The union’s leader Paul Kenny had written to 100 Labour MPs and called on the Chancellor to end tax relief on interest payments of corporate debt, a central plank of buyout structures.
Blair’s comments come in the same week as the UK’s Electoral Commission showed the party received £500,000 from private equity firms and executives connected with the sector.
Nigel Doughty, chairman and founder of Doughty Hanson, gave £250,000 as did Sir Ronald Cohen, founder of Apax Partners and billed as Gordon Brown’s banker. Cohen is widely expected to take a formal fundraising role if and when Brown succeeds Blair.