SVG Chairman Criticizes Tax Rates

"I have not heard anyone give a clear explanation of why it is justified," said Mr. Ferguson, the chairman of SVG Capital.

One explanation is that an industry valuable to the UK may change its location to another financial centre without such tax break, and that would have a negative effect on growth and job places in UK.

If the tax on private equity is increased there is a risk that many private equity executives would find other ways to avoid paying any tax at all. Therefore the tax increase may have an opposite effect.

The debate about tax therefore is only one part of the issue. The most important question, for which the Treasury Select Committee is trying to find the answer, is whether private equity has a positive or negative contribution to UK in general.

"Any common-sense person would say that a highly paid private equity executive paying less tax than a cleaning lady or other low-paid workers . . . can't be right," said Mr. Ferguson, who is also the chairman of the remuneration committee at broadcaster BSkyB.

Mr. Ferguson critiques occurred several weeks before five of Europe's top buy-out executives will meet Commons Treasury select committee inquiry into private equity.

Mr. Ferguson found it "a little strange" that the committee had not invited investors in private equity to give evidence, because it would not give "a complete picture of what is going on" without owners' point of view.

Mr. Ferguson's comments have a great weight as he has 25-year experience in private equity sector and as a chairman of SVG Capital, as the biggest investor in Permira's record €11bn (£7.5bn) fund with a commitment of €3.8bn.

SVG Capital was established in May 1996 as a result of an exchange offer made to all investors in Schroder Ventures private equity partnerships for their limited partnership interests in exchange for shares in SVG Capital. 31% by number and 27% by value took up the offer and SVG Capital was listed on the London Stock Exchange with holdings in 23 funds and net assets of £187 million.

SVG Capital has since gone on to commit over £3 billion to private equity and in the year to 31 December 2006, net assets per share (including the unaudited Directors' valuation of SVG Advisers) increased by 24.2% to 859.2p per share, with fully diluted Shareholders' funds increasing by 21.3% to 810.1p per share. Since listing, compound growth in net assets per share has increased by 15.1% p.a.*, a 9.9% out-performance of the FTSE All-Share.

Since its inception, SVG Capital has had a strong relationship with Permira (formerly Schroder Ventures Europe) and has invested in all of the Permira Funds, which have been a key driver of SVG Capital's net asset growth to date.

SVG Capital is the largest single investor in the Permira Funds, representing over 20% of those funds and the Permira Funds represented 86% of SVG Capital's investment portfolio at 31 December 2006 (by value).

Mr. Ferguson also mentioned that he did not agree with the unions arguments about the private equity sector destroying job places. He said that any policy change would not have negative effect on the private equity's role in the economy. - Alla Harutyunyan for HULIQ.COM