The biggest show in town

As far as private equity drama goes, the UK Treasury Select Committee's inquiry into private equity on June 21 was at good as it gets ? big crowds, big names and big stakes. For one day only, the industry was the biggest show in town.

For the first hour, the unions took center stage, focusing their assault on leveraged buyouts, but the committee was not uniformly accommodating. ?They're an easy target for you,? said Labour MP Sion Simon. ?A young industry that knew nothing about the media or the political process. It's old-fashioned class politics, you're just kicking them round because you can. That's what's going on here, is it??

But for the most part, the labour leaders were given a fairly easy ride. After all, this was just the undercard ? everyone was saving their big punches for the main event. Conservative MP ? and former Apollo Management partner ? Brooks Newmark scored the only real body blow, pointing out that the GMB's report on private equity's pension fund liabilities included at least two entities that were nothing to do with private equity. But he lacked the conviction to land the killer punch, and the union deftly slipped away from the ropes.

And then the hour had finally come, as the unionists swapped seats with their nemeses. Not that Philip Yea was really a nemesis ? 3i's chief executive, who seemed very much the senior prefect of the group, was even referred to by the panel as ?the acceptable face of private equity.? He was flanked by three of the UK's modern-day kings of capitalism ? Permira's Damon Buffini, Carlyle's Robert Easton and Dominic Murphy from KKR.

The four men had clearly been well briefed, and their core messages were clear: we're benevolent long-term investors, we make pots of money for pensioners. Stay calm, concede nothing, fight sound bites with statistics (like KKR's 31 year history, which Murphy mentioned roughly 47 times, and the 30 million pensioners benefiting from Permira's returns).

By and large, the strategy worked, as the four comfortably batted away questions on short-termism, job creation, conflicts of interest, and even employee relations. ?As an industry we have not done a good enough job [of communicating] with our employees,? admitted the consistently impressive Easton. Though just to be clear, he wasn't talking about his own firm here. ?When I buy a company, I go and meet every single employee. I've stood in front of workforces from Sheffield to South Korea.?

The quartet only seemed to stumble when asked about excessive leverage levels, from their former industry colleague Newmark.

Their rather woolly answers caused him to castigate their responses ? perhaps keen to avert any hint of partiality.

Of course the real focus of the debate ? thanks to SVG's Nick Ferguson, rather than the Treasury itself ? was always going to be the tax row. The committee member gloried in private equity's disunity, reminding the panel of the ?enemy within? ? grandees like Ferguson and Sir Ronald Cohen who are openly advocating a change to the tax rules. ?You're fighting like ferrets in a sack, aren't you?? tittered chairman John McFall. ?Do you think you're losing the argument??

Again, the panel largely managed to fend off the assault, although they provoked the chairman's wrath by claiming not to know how much capital gains tax their organizations paid to the Inland Revenue each year. ?I find that amazing ? you're the really bright guys, the masters of the universe,? said an astonished McFall, to much hilarity in the chamber.

As the hordes filed out into the Westminster evening afterwards, the consensus seemed to be that honors were fairly even at the end of a long three hours. In fact the greatest testimony to the performance of the panel ? who slipped away rapidly looking relieved ? was the general sense of disappointment among the journalists who had been hoping for a more dramatic headline. But for a few hours at least, private equity had been front page news.