News, Culture & Society

ALEX BRUMMER: Lifting the lid of private equity secrecy

Lifting the lid of secrecy: Bridgeport float would open the private equity firm up to investor scrutiny, says ALEX BRUMMER

Among the great defences put up by private equity barons is to argue enterprises in their charge are free of the short-termism of quarterly reporting and can rapidly transform companies.

That begs the question as to why Bridgepoint, headed by veteran deal maker William Jackson, plans a London initial public offering next month.

The first reason is that it gives existing partners, who have shown patience over two decades, a chance to cash out. 

Private equity firm Bridgepoint is planning a London initial public offering next month

That seems a little odd since they already will be very rich thanks to the magic of carried interest. That is the fancy name for the tax-advantaged share of profits on their deals.

The second is that by raising new capital, as Bridgepoint intends, it will gain a £300million fighting fund plus the ability to raise new equity in the future. This would allow it to scale the money tree by doing bigger deals.

There is an inherent conflict in the proposed float. As a public company Bridgepoint’s minority shareholders rightly would expect much more transparency. 

An irritating feature of private equity is that websites and accounts provide little financial detail on the clients hidden under the bonnet.

As a quoted venture capital/private equity fund the 3i Group does provide useful information about its investments. 

Its origins in the semi-public sector make it a little different. Blackstone is quoted in New York but except when its spin-offs go wrong, such as UK care homes group Southern Cross, it is difficult to ascertain what is going on.

That said, Bridgepoint has added to the exhilaration of the nation. Julian Metcalfe’s Pret A Manger is a product of the Bridgepoint nursery as is successor high street cafe Itsu. Recently there has been a drive into software, credit and tech.

There is a sizeable funding gap in the UK for start-ups and mid-sized companies and if a quoted Bridgepoint could help close that gap it might contribute to the challenge of turning raw R&D into viable concerns. 

Bridgepoint is following in the footsteps of its European counterparts – Sweden’s EQT and Switzerland’s Partners Group.

Both have soared in value as public companies. Bridgepoint’s returns have in the past been less exciting. There may be better opportunities if it were to dip into undervalued real estate assets.

Jackson could win converts if Bridgepoint were to pledge to the highest standards of ESG and disclosure. 

It plans to join the main market, unlike Deliveroo, which it backed, despite an impenetrable dual shareholding structure. But old secretive habits may be hard to discard.

Space race

The rantings of Dominic Cummings against former colleagues in the Government diminished his wafer-thin credibility.

No one is without virtue, and Cummings’s faith in science had real merit.

A tangible result of his belief in innovation was the decision of the Government to help buy satellite pioneer Oneweb out of bankruptcy in the belief it could give Britain a leg-up in the commercial space race.

The UK was left up a creek without an oar when it exited Europe’s Galileo system and carelessly allowed the UK’s own satellite-space inventors, Inmarsat and Cobham, to fall into overseas hands. 

In the effort to get back in the space race the UK joined with Indian tycoon Sunil Bharti Mittal in a $1billion (£720million) rescue of Oneweb.

The deal was criticised on the grounds that low-Earth orbit technology was not fully proven and it was not clear, as claimed, that it could be used for national security.

The efficacy of the tech may still be unproven but the fact that Mittal is putting in an extra $500million (£361million) should inspire confidence. BT is trying is own moon shot by signing a deal with One World to help connect rural Britain.

Up, up and away…

Golden goal

Euro 2020 is proving a great, uplifting spectacle of football in spite of being organised by Uefa’s self-serving elites.

The success so far of Italy, smoothly into the quarter-finals, has given Juventus proprietor, car magnate Andrea Agnelli, opportunity to turn defence into attack.

Reuters reports the club is mulling a £344million equity raising to repair its finances by paying down debt.

With global interest in football at a peak but club finances in post-pandemic doldrums, Juventus are taking first-mover advantage with Manchester United, Barcelona and Inter Milan all in the slipstream.