大象传媒

Hunter gives it away

• Robert Peston
• 17 Jul 07, 08:00 PM

Suddenly, giving it all away is all the rage.

Just in the past month, a pair of City superstars, , have disclosed charitable donations running to hundreds of millions of pounds.

But it is a competitive field, and they are being leapfrogged by the Scottish entrepreneur, Tom Hunter, who is pledging to transfer at least a billion pounds to his - which funds educational projects in Scotland and anti-poverty initiatives in Africa.

All this largesse reflects the astonishing sums being earned by successful individuals in today's entrepreneurial Britain.

However Britain's megawealthy have until recently been far less philanthropic than their US rivals.

With the gap between rich and poor widening, some of the super-rich are concerned that they will find their wealth-creating activities curbed by politicians, if they are not seen to be making more generous charitable contributions.

Hunter also has another motivation. Since becoming rich beyond his wildest dreams in 1998 with the , he says his main reason for making yet more money is the thought that most of it will go to good causes.

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Not-so-private equity

• Robert Peston
• 17 Jul 07, 12:00 PM

Sir David Walker was to assess whether it was communicating adequately with the outside world. He knew the answer before the off 鈥� since for most partners in private equity firms the 鈥減rivate鈥� bit of their moniker is a way of life.

Walker says such secrecy is no longer appropriate. No surprise there. The Treasury has made not-very-veiled threats that if private equity firms don鈥檛 do a better job of telling their employees and other interested parties (including largely ill-informed politicians) what they鈥檙e up to, they could find themselves compelled to do so.

Also, there is a semi-respectable intellectual case for greater disclosure, which is that they now control such a big and rising share of the British economy (they are responsible for an estimated 8 per cent of UK private-sector employment) that there is a public-interest case for having clearer oversight of their activities.

Walker himself 鈥� as someone who believes that private equity spurs productivity improvements and economic growth 鈥� hopes that harvesting more robust data on private equity will turn out to be good for the firms.

He is convinced that analysis based on reliable information 鈥� which he acknowledges is in short supply 鈥� would put paid to criticisms that private equity is largely a 鈥渂ubble鈥� phenomenon created by cheap credit markets and rising share prices.

He believes that private equity will be able to demonstrate that it creates wealth to a large extent through superior operational management of companies.

That said, he does acknowledge that the capital structure of private-equity owned businesses is probably superior to that of many public companies.

Or, to put it another way, he is bemused that listed businesses haven鈥檛 followed the lead of private-equity-owned ones by borrowing more and borrowing in a more sophisticated way.

For me, therefore, the most welcome of his recommendations are those that should allow the current heated and emotional debate about private equity to be replaced by one that actually has access to proper facts.

So, for example, Walker wants private-equity firms to disclose by category the source of their equity funding 鈥� which will show that any superior returns they make are distributed largely to overseas investors, rather than to British pension funds.

He also urges that private-equity firms publish a breakdown of their returns to show what proportion of their profits comes simply from riding on the back of rising stock markets, what share comes from financial engineering and what part comes from genuine productivity and trading improvements in the businesses they own.

Another proposal is that the private-equity partnerships should publish an annual account of their respective investment philosophies and how they oversee and direct companies in their portfolios.

Finally he wants private-equity owned businesses to behave a little more like public companies by publishing proper annual reports of their financial and operational progress within four months of the year-end and shorter six-monthly statements.

Critics of the industry will say this is all motherhood and apple pie 鈥� and that Walker is merely deflecting from more important debates about how little tax private equity pays and its impact on employment.

Except that these debates are less informed than they might be, in the absence of the kind of information which Walker鈥檚 proposals should yield.

So one reasonable concern is that some private-equity firms will ignore whatever code-of-practice emerges from Walker鈥檚 review, because they will view it as burdensome and intrusive.

And although the media, politicians and trade unionists may name and shame them, these firms won鈥檛 give a stuff, so long as they continue to receive oodles of cash from their overseas backers.

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