US private equity continues march on the UK with £1 billion of deals

The City has been accused of undervaluing UK business

(PA Wire)

THE march of US private equity into corporate Britain continued apace today with another £1 billion of deals in the pipeline.

New York’s Siris Capital is taking over Equiniti, the share administrator and payments firm, in a £673 million deal.

And Morgan Stanley Infrastructure Partners, an arm of the mighty Wall Street bank, said it is pondering a move for waste management company Augean.

Augean shares jumped 45p, 18%, to 294p. That leaves the business valued at around £310 million.

The deal for Equiniti is at 180p a share, 50% above the price back in February when the directors voted to back a takeover.

There is growing concern in some parts of the media and government that private equity controls too much of corporate Britain. And that it has a short-term approach to managing those firms.

Critics of the City note that foreign investors seem to place a far higher value on many UK stock market listed companies than our own pension funds, leaving them vulnerable to a bid.

Private equity firms have spent more than $18.3bn on takeovers of publicly traded UK firms this year, according to Bloomberg. They are spending at the fastest rate since before the 2008 financial crash.

Dealogic says there are 91 deals by private equity for UK companies this year already.

The concern is that once away from the stock market, private equity firms squeeze the companies for cash rather than invest for the longer term, potentially jeopardising jobs. The takeovers of Debenhams and AA nearly two decades ago are often cited as examples of private equity mismanaging previously good companies.

Augean, founded in 2004, offers waste management services to companies in a range of sectors including oil and gas.

In a statement this morning, Morgan Stanley said it “notes the recent press speculation regarding a possible transaction involving Augean and confirms that it is in the preliminary stages of considering making an approach”.

It did not discuss the terms of the bid.

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