The private equity industry has unveiled its first attempt to stem the rising tide of political criticism with the publication of a review proposing greater financial transparency and improvements to corporate governance which could include appointing independent directors, The Financial Times reports.
Sir David Walker, the former chairman of both Morgan Stanley International and the Securities and Investments Board appointed by the buy-out industry to propose a code of conduct, will trigger a fierce debate with Tuesday’s consultation paper.
His review is the industry’s first response to criticism, particularly in the UK, where it has been accused of being too secretive after taking over household name companies, such as Alliance Boots and the AA breakdown service.
Making the case for more transparency, Sir David is understood to recommend much greater disclosure on the debt structures of portfolio companies, including repayment schedules and covenants for loans.
But the idea of non-executive directors with experience of the relevant sector being added to portfolio company boards could provoke the biggest backlash.
“The industry will absolutely hate this,” says Darren Redmayne, managing director of Close Brothers, the UK investment banking boutique.