More Transparent, Less Clear

The private equity industry in the UK has become more transparent as a result of the publication of the Walker Report, but not necessarily better understood.

That is the verdict of new research from financial adviser Grant Thornton, which surveyed 100 senior private equity executives.

Of those surveyed, 68% said the industry is now more transparent, although this dropped to just 46% on the matter of there being a greater understanding of the private equity industry since publication of the report.

More damagingly, only 27% believe that private equity has a better public image and nine percent said that there is now a more negative perception of the industry.

“Private equity still has a major challenge in communicating the overall positive and growing contribution the industry makes to the UK economy,” said Mat Bhagrath, private equity partner at Grant Thornton.

“Despite the general economic downturn, the industry still has significant funds to invest, which in the right circumstances will have a positive impact on businesses that would otherwise have struggled to raise funds.”

Ironically, the collapse of the credit markets which has hampered the industry to a large degree may also provide breathing space in terms of negative publicity.

“The credit crunch has put a dampener on the highly-leveraged buyouts market, resulting in a number of private equity firms reverting to focusing on improving underperforming companies and their profitability,” concludes Bhagrath.

“When private equity operates in this area the media spotlight is a lot less harsh, and many private equity houses are content to go on operating as they have always done, with the emphasis on private.”

Robert Venes is a London-based reporter with Acquisitions Monthly. This post first appeared on Thomson Merger News