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Last Updated: Wednesday, 14 February 2007, 17:14 GMT
CBI defends private equity firms
Birds Eye fish fingers
Jobs have been lost at Bird's Eye since it was bought by Permira
The head of the CBI has sprung to the defence of private equity firms, after criticism from unions about job cuts at companies they take over.

Director General Richard Lambert lauded private equity firms for improving the performance of their businesses.

Criticism of the role played by private equity has grown following job losses at firms such as the AA and Bird's Eye.

The head of Permira, which owns the AA, has pledged to meet union leaders to address their concerns.


Damon Buffini, Permira's managing partner, said he wanted an "open and constructive" relationship with unions, accepting there was some "confusion and apprehension" about the motives and actions of private equity firms.

"As a result of the investments that we have made, the futures of numerous companies in the UK and across Europe have been secured and strengthened," he said.

In most cases, businesses have emerged from private equity ownership a whole lot more healthy than they were when they went in
Richard Lambert, CBI director general

Unions have been angered by job losses at private equity-owned businesses and called on ministers to scrap tax relief for interest payments on loans often used to fund takeovers.

A GMB spokesman said he hoped Mr Buffini's offer of a meeting was not a "PR stunt".

'Healthy role'

Mr Lambert acknowledged the need for a debate over the role of private equity in the economy, but said he believed its contribution was "almost entirely beneficial".

Private equity firms had a strong track record of creating jobs and had a vested interest in the long-term health of the businesses they owned, he said in a speech in London.

"None of this squares with the allegations of robbery and plunder," he said.

"In most cases, businesses have emerged from private equity ownership a whole lot more healthy than they were when they went in."

Supermarket chain Sainsbury's recently became the latest UK business to be targeted by private equity, with CVC, Kohlberg Kravis Roberts and Blackstone considering a joint bid.

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