Treasury Takeaways

Yesterday I spent three and a half hours in The Treasury Select Committee listening to Union Leaders and then Dominic Murphy of KKR, Philip Yea of 3i, Damon Buffini of Premira and Robert Easton of the Carlyle group give evidence. David Blitzer of Blackstone was also called before the Committee but sent a letter in his place which was circulated to the press gallery stating that because of his IPO blah, blah, blah he wasn’t coming.
So what were the main takeaways then?

It was obvious by some of the questions that the Members of Parliament asked that they are pretty clueless about private equity. And there is really no excuse for it. There are private equity conferences in London on a weekly basis and those MPs should have boned-up on the industry before calling in such a powerful group of executives.

A trade journalists like me would give, definitely not my right arm, but perhaps a baby tooth or a lock of hair to be able to put tough questions to a panel of that caliber but instead we had to listen to MPs asking for the most basic facts about the industry such as “How much do you personally invest into your funds?” It is pretty well known that investors expect managers to invest 1% more or less in certain cases but that can be taken as industry standard. The also asked “What is your fee structure?” Again, pretty well know that 2 and 20 will suffice as an answer here.

So it is no surprise then that Dominic Murphy of KKR got a bit agitated after being subjected to questioning that revealed how benighted these MPs are, they asked him about his personal tax burden and wealth in front of a gallery full of press. He replied: “My tax burden is between me and the Inland Revenue.” Too right. When quizzed on the topic of virtually tax free carried interest, Murphy said that he was a law abiding citizen and would meet the tax burden assigned by the Treasury – though he is an Irish domiciled tax payer not a UK one.

Robert Easton made a great impression on Chairman McFall when asked in a thick Scottish accent: “Are you a UK domiciled taxpayer even though you’re American?” Easton rebuffed: “I’m not American. I’m British through and through. I am a UK domiciled taxpayer and a Scott.” The Chairman could not have been more please, I was in the back of the gallery but I could swear he had a tear in his eye. “Ahh, a fellow Scotsman. . .”

Some MPs were smiling and others had a look of disgust when Damon Buffini revealed that Premira execs invested around €400m of their own money in certain deals.

Though all four of the private executives had been well coached and made good performances the star had to be Philip Yea of 3i. He did have an easier time during questioning because 3i is listed and they have a strong venture business but he was brave, eloquent and poised. He educated the panel without being patronizing and wasn’t afraid to deviate from the pack when asked “If the tax laws were changed would it harm the UK economy?” He bravely said yes that it would drive some PE managers to invest and perhaps domicile offshore. He wasn’t making a threat he just answered in a matter-of-fact way. And he took the quote of the day with this cracker: “Carried interest isn’t just a golden shower at the end.” And on that note the meeting was adjourned.

As a point of order, I think they had the heat cranked up in the room. So perhaps on the webcast the managers appear to be sweating. I can tell you for a fact that I was and so was everyone else.

Webcast on

For the full story and photos see the 01 July issue of EVCJ at