Private equity predators have spent nearly £ 100bn to loot UK businesses since coronavirus pandemic began

  • The buyout barons have taken over 1,206 companies, including Morrisons and G4S
  • ‘Pandemic looting’ sparked backlash from MPs, bosses and investors
  • Critics warn of private fund owners cutting jobs, loading companies with debt

Private equity predators have spent nearly £ 100 billion looting UK businesses since the start of the pandemic.

The buyout barons have taken over 1,206 companies, including names known from Morrisons to G4S, according to data from Refinitiv.

The “pandemic looting” has sparked a backlash from MPs, bosses and investors who claim foreign predators are robbing Britain of some of its best businesses.

And critics have warned the frenzy could have long-term consequences, as ruthless private equity owners cut jobs and load companies with debt.

Labor MP Dame Margaret Hodge, former Culture Minister, said: “Most come for short-term gain by asset stripping companies, loading them with debt and then getting out. In the medium term, there is no benefit to the UK economy, and there may indeed be losses. It will cost us jobs and future growth.

Since the pandemic struck last year, 1,206 companies worth £ 92 billion have been bought out by private equity. This year, 773 deals were made, worth a total of £ 63bn, up from 461 in 2019. The largest was the £ 7bn deal from Clayton Dubilier & Rice for Morrisons supermarket.

The buyout of Asda by the Issa brothers was also backed by US private equity firm TDR Capital. And Signature Aviation was picked up by a consortium led by US titan Blackstone, led by billionaire Stephen Schwarzman. He also bought out the real estate company St Modwen.

The titans of private equity are only interested in maximizing profits during the time they own companies. This can be destabilizing in the long run.

The so-called “leverage effect” has proven to be disastrous in past agreements. The AA nearly collapsed last year under a pile of debt. His rescuers, ironically, were the buyout companies Towerbrook and Warburg Pincus.

And Debenhams, which finally closed its doors last year, has racked up suffocating debt. As early as May of this year, the Mail feared rapacious private equity firms were buying companies at low prices.

In some cases, private equity provides useful liquidity for expansion. Kurt Geiger and Worldpay have been successful.

Conservative MP Kevin Hollinrake said: “You want to see businesses run for the long haul, not to make a quick buck.”

In this year’s Mail, Lord Heseltine said the UK was one of the only developed economies not to question whether the takeovers were in the national interest.

Hodge said: “There is an urgent need for government and parliament to strategically examine the impact of the activity of these companies. Britain cannot maintain this laissez-faire attitude.