Philip Yea FCMA
Philip Yea FCMA
Chief executive, 3i
“
We’ve created
over £3.5bn of
value in UK firms
over the past
three years –
and most of this
flows back into
pension funds
“
“
“
nge in
ere is chaity
will
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Quick CV
1974
Private equity is rarely out of the headlines these days. Are
you a force for good or a sinister capitalist conspiracy?
All we do is invest in companies and help them to grow.
Where do you draw the line between what Richard Branson
and Philip Green do and what we do? There’s a fundamental
misunderstanding about private equity that the industry
hasn’t addressed, which we’re now trying to change. This is
matched by a broader misunderstanding about the risks and
rewards of capitalism generally. You see one story in the
media about pension funds failing to get returns and then
another about how private equity penalises employees. But
we’ve created over £3.5bn of value in UK firms over the past
three years – and most of this flows back into pension funds.
Does private equity pay its fair share of tax?
Tax is a matter for government to decide. We work in 14
countries, so we work with 14 governments. I’m a member
of the chancellor’s group that’s working to maintain the
competitiveness of London as a commercial centre. If the
government needs to make changes to the tax system, it
must ensure that these don’t undermine the success of
private equity in the UK and the attractiveness of London to
the financial sector. When you look at the number of people
employed in the capital per private equity executive, you
realise that the issue is not as simple as it seems.
Does private equity deserve its reputation for secrecy
and limited reporting?
Reporting is demand-led rather than formula-led because
you need the market to decide what information is relevant.
It’s not true that there is no information about private equity
companies – they give extraordinarily comprehensive
information to investors. We have actually won a prize for the
best corporate social responsibility reporting in the FTSE 100.
Isn’t that ironic? It shows that you can combine the best of
both worlds. The chairman of the Treasury select committee
held up 3i’s annual report and said to the other private
equity firms: “As an industry you would not find yourselves in
the position you now face, real or otherwise, if you had
annual reports of this kind and communicated with
people.” That was gratifying.
But isn’t private equity about overloading
companies with debt?
People often ask: “What is private equity’s
advantage? Isn’t it just debt?” But our
biggest business is growth capital and
that’s about putting money into firms to
help them expand. It’s about looking at the
business and its potential and aligning
leaders and managers to gain advantage.
It’s not necessarily about debt. There
has been an increase in leverage and,
undoubtedly, some companies will be
1977
1984
1999
2004
12
ent
financial managem
One2One
Chief Executive
3i
Photographs (including cover): Charlie Hopkinson
>
financial management 11