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Private equity seems to have given a lamentable account of itself before the Treasury select committee today. Our private equity correspondent, Martin Arnold, was there and says the MPs asked the sort of questions you would expect but that the BVCA representatives failed to engage with them properly and tell their story. They seemed evasive and even private equity executives who have caught up with the proceedings have described the performance privately as pathetic. We’ll have more in tomorrow’s paper.

The spirit of public service lives on! Jeremy Heywood is bailing out of Morgan Stanley and returning to Downing Street. This is a big blow to Morgan Stanley, which recruited the then-prime minister’s principal private secretary just over three years ago. Heywood was not a part-timer who had been brought in to the bank simply to open a few doors. He was full-time and became co-head of UK investment banking, and I have always had the impression from people inside the bank that they were extremely pleased with him. He rejoins Downing Street as head of domestic policy and strategy.

The other important story today of course is that Andy Hornby’s first year in charge of HBOS is not going smoothly. It emerged today that the wunderkind has succeeded in halving the bank’s share of new mortgage business. Lex also points out that he has had the Farepak controversy to contend with and a 10 per cent underperformance of his share price. HBOS shares are off 4 per cent today.

Debenhams shares jumped 3½ per cent on news that Baugur has built up a stake a nearly 5 per cent. Don’t hold your breath for a bid though – just look at how long they have sat on their hands at Woolworths.

Rumours of the day: Yet more bid rumours at ICI (Akzo Nobel mentioned), Cable and Wireless (France Telecom mentioned), Vodafone (Blackstone and Verizon in the frame) and Kelda (Veolia). There is also talk that BG could merge with Woodside in Australia. See FT Alphaville for more detail on all these stories.

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