大象传媒

Brown hearts PE (still)

• Robert Peston
• 17 Apr 07, 07:45 AM

Has Gordon Brown turned against private equity? That's the conclusion drawn by a number of newspapers in explaining why Government attempts to sell have stalled close to the finishing line.

and have both reported that Brown is running scared of a 拢400m disposal of this famous state-run bookmaker to a racing-industry consortium that includes a private equity firm,

The suggestion is that the Chancellor does not want to be seen to be favouring the moneybags of private equity when his election as Labour's next leader is almost a racing certainty, for fear of inflaming anti-private-equity trade unions and leftish Labour MPs.

If Brown were spurning private equity, that would be a big deal. He has for years been a cheerleader for these purchasers of British businesses. He has a powerful conviction that when private-equity funds buy companies they frequently make them more efficient and enhance their long term prospects. And the way he slashed the rate of capital gains tax has been a particularly remunerative boon for the multi-millionaire partners in private-equity businesses.

But, for now, I don't think private-equity firms need to start looking for new premises in friendlier parts of Europe - because Brown has had no personal involvement in the Tote deal, or so I am told.

Treasury officials are frustrating the Tote disposal for the time-honoured reasons that they're not sure the proceeds are quite enough, and they're alarmed at the magnitude of potential rewards for managers.

Is this, however, a pernicious example of the politics of envy in Whitehall? On this occasion, I think not.

The consortium has benefited from a Government decision to sell the Tote without a proper competitive tendering process. For reasons best known to the Labour Party, the Government is committed to sell this famous betting business to the racing industry, rather than obtain the fattest possible price by allowing all-and-sundry to bid for the gem.

But since the racing-industry consortium is benefiting from a sweetheart deal, the Treasury is understandably concerned that management rewards and incentives should not be perceived to be excessive.

Had the Government allowed the Tote to be sold to the highest bidder, then it wouldn鈥檛 have mattered a bean what the executives at the winning team stood to earn, because there would have been a huge return to taxpayers. But in a one-horse race, it's probably reasonable to cap the prize money.

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