Watchdog takes some big UK private equity-backed groups to task over disclosure

By Naomi Rovnick

LONDON (Reuters) – Some of Britain’s best known private equity-backed companies, including pub operator Punch Taverns and London City Airport, have been named by a buyout industry watchdog for not following its transparency and disclosure guidelines.

The Private Equity Reporting Group on Thursday identified the companies as non-compliant with industry guidelines that urge timely reporting of how Britain’s largest privately-held businesses are faring financially.

Buyout-backed companies in Britain make up a significant part of the corporate sector, supporting 2.2 million jobs and generating £137 billion of GDP in 2023, according to the British Private Equity and Venture Capital Association.

In contrast, the number of companies listing on the UK stock market via initial public offerings has slumped, amid a lack of interest from international investors.

Punch and London City Airport were named as part of a group of 11 businesses that the PERG’s report said “have not complied in full with any of the core components” of its suggested best disclosure practice.

Others named included property group McCarthy & Stone, PureGym and public sector engineering contractor Amey.

A London City Airport spokesperson said the group was “fully and legally compliant” with its “statutory disclosure requirements.”

A McCarthy & Stone spokesperson declined to comment.

An Amey spokesperson said the group was “committed to transparent governance” and its latest audit had been delayed by a sale of the business. Amey was “disappointed” not to have been contacted by the PERG to allow it to explain this, the spokesperson said.

The PERG did not immediately respond to a request for comment.

The other companies named were either not available for comment or unable to provide a response.

The PERG, which works alongside the BVCA, also highlighted supermarket chain Asda and transport group Stagecoach for “excellent practice” in their reporting.

The PERG produces its report annually. In its previous report in early 2023, it highlighted some of the same companies as non-compliant with the guidelines, including London City Airport, McCarthy & Stone, Punch Taverns and PureGym.

The PERG’s voluntary guidelines recommend that buyout-backed businesses should produce annual reports with similar disclosure levels to stock exchange-listed businesses, going beyond their minimum legal requirements to file accounts with Companies House.

The guidelines, which originated in David Walker’s 2007 review of the private equity industry, aim to inform stakeholders such as employees and suppliers how large buyout-backed businesses are performing and operating.

In its report, the PERG said that of a sample of 25 buyout-backed companies whose reporting it reviewed, the vast majority had complied with its guidelines. Meanwhile, 60% had prepared disclosure to “a good standard,” the same rate as in 2022 and 2023, it said.

“Developing higher standards is a shared aim of our members, and all private equity firms in scope of the guidelines need to embrace increased transparency and disclosure,” BVCA chief executive Michael Moore said in a written statement.

“Doing so enables us to collectively tell the story of the vital role played by private equity in the UK economy, and through that build greater trust with our key stakeholders.” 

(Reporting by Naomi Rovnick. Editing by Anousha Sakoui and Jane Merriman)