FSA sounds alarm on private equity

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The FSA is concerned about the amount of money banks lend to private equity firms. “This lending may not, in some circumstances, be entirely prudent,” it says in a discussion paper published today on the private equity industry. The report is a mine of useful data on the industry. It says the rapid growth of the private equity market may undermine the public markets. It also says “material conflicts of interest” arise in the industry between the funds, their investors and the companies they own. And it says private equity transactions create “considerable potential for market abuse”.

That this should come just two days after our Saturday scoop that KKR made a €40bn takeover approach to Vivendi only makes it more interesting. That story, which illustrates private equity’s growing confidence, will have terrified FTSE 100 company chief executives who had thought themselves invulnerable. Check out FT Alphaville for the latest on reactions in the credit default swaps market.

Ryanair chief executive Michael O’Leary says he might consider returning cash to shareholders next year, not as a regular dividend but in a one-off payment. It isn’t clear if this would be conditional on his Aer Lingus bid not proceeding but we’ll find out. Europe’s largest low-cost carrier said that for the half-year, revenues rose 33 per cent to €1.26bn as pre-tax profits increased 38 per cent to €372.2m.

Lehman Brothers has become the latest investment bank to take a stake in an alternative asset manager, following Morgan Stanley’s investments last week. Lehman, which thought about investing in GLG last year but didn’t, is buying 5 per cent of London-based BlueBay Asset Management. BlueBay today set a price range for its float of 250p-300p, valuing it at £524m at the middle of that range. There is an interesting discussion of what some of these sorts of companies are worth on Albourne Village,

Shares in 888 Holdings have leapt on confirmation of our Saturday story that it is talks about being taken over by Ladbrokes. We’ll do more on this tomorrow, although I’m not sure exactly what yet.

The ITV board meets today to whittle the CEO shortlist down to four. It’s only taken three months to get here. Let’s hope whichever one them pours the tea in the meeting doesn’t offer coffee as well.

I am also fascinated by the possible showdown between the UK pensions regulator and Sea Containers because of what it says about the ability of the regulator to protect the interests of British employees of foreign companies. It was an issue raised by John Ralfe in relation to Tata’s takeover of Corus and it has some parallels with last week’s news that the Takeover Panel’s jurisdiction does not extend to numerous foreign companies listed in London.

Rumour of the Day:

Shares in Galiform, the business formerly known as MFI and which now consists mainly of the Howdens builders’ merchants chain, are up on talk of a bid from Travis Perkins.

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