Private equity’s dominance has gone too far
H ere it is then: private equity’s long-predicted raid on the UK’s ranks of mid-sized quoted companies. Last week, Dechra Pharmaceuticals, a veterinary medicine group, said it had received a potential cash bid of £4.6bn from EQT, the Swedish private equity firm. Then Network International, a payments processor in the Middle East and Africa, said it was in talks with the European private equity titan CVC plus Francisco Partners from the US.
On Monday, the Aberdeen-based oilfield services group John Wood, after putting up stout resistance for weeks, said it was open to talks with Apollo of the US. And Apollo popped up again mid-morning with a tentative approach to THG, the headline-hogging e-commerce retailer formerly called The Hut Group.
The reasons for this flurry of activity aren’t hard to guess. Would-be buyers are increasingly confident that interest rates are close to their peak, a crucial consideration for them given the quantities of debt that private equity tends to load on to everything it acquires.
The UK stock market, even after a good run, also looks cheap by international standards. And, now that Liz Truss and Kwasi Kwarteng are off the scene, the pound is no longer seen as a currency that can crumble after a mini-budget. So, yes, for a private equity industry heavy with cash that must be converted into real investments, the UK stock market is an obvious place to look.
London’s battalions of advisers, lawyers and hangers-on will be delighted but anybody worried about the long-term health and vitality of the UK’s stock market has fewer reasons to be cheerful. Some of these targets (think THG) may be suited to private life, but stock markets are still meant to be more than just a hunting ground for private
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