Opposition leader Ed Miliband’s branding of private equity firms as ‘asset strippers’ is nothing more than a ‘slick slogan’, says the British Venture Capital Association (BVCA).
Opposition leader Ed Miliband’s branding of private equity firms as ‘asset strippers’ is nothing more than a ‘slick slogan’, says the British Venture Capital Association (BVCA).
The Labour leader took to the stage at the Labour Party Conference in Liverpool today to outline his pro-business views, which compared the ‘good’ with the ‘bad, and saw him label private equity firms as ‘asset strippers’.
But the BVCA has been quick to respond to the criticism, saying the speech and the poor characterisation of private equity was unfair.
Head of public affairs at the industry body Tim Hames comments, ‘His distinction between “good” and “bad” businesses risks being seen as a slick slogan in search of serious substance.’
Miliband insists that in the 21st century every British party should be pro-business to ensure economic growth, but he says there are different ways of doing business and people have to choose the right ‘side’.
‘Are you on the side of the wealth creators or the asset strippers? The producers or the predators?’ exclaimed Miliband.
In the speech, Miliband brands the private equity firms and related financing industry businesses as ‘just interested in the fast buck’, and he highlights the case of the failed Southern Cross care homes business as an example to back up his argument.
He stated, ‘Look at what a private equity firm did to the Southern Cross care homes – stripping assets for a quick buck and treating tens of thousands of elderly people like commodities to be bought and sold.’
Southern Cross was a private provider of health and social care services, the largest of its kind in the UK and once listed on the London Stock Exchange before closing this year after years of financial troubles.
Blackstone Capital Partners supported the management buy-out (MBO) of Southern Cross from West Private Equity in 2004, and later sold on the healthcare provider two years later.
The BVCA is angered by Miliband’s choice of example. Hames comments, ‘The firm concerned has not owned Southern Cross for five years.’
He adds, ‘To hold that firm responsible for all that has happened there since then is as fair and responsible as blaming Mr Miliband for everything that has happened to Britain since 2006.’
Miliband says a ‘competitive tax scheme’ is the answer to supporting small businesses and combating against private equity firms and businesses that are out for ‘a quick buck’.
But while the BVCA welcomes his emphasis on business innovation, the body says he should realise that it ‘chimes with the ambitions and actions of the private equity and venture capital industries’.
