In defence of private equity

Spectator

31-07-2025

Spectator readers will not need me to tell them the meaning of the Latin 'cura terrae'. Taking care of the Earth was one of central arguments of last week's front-page feature against private equity. But Cura Terrae also happens to be the name of a business based in Sheffield.
This business is an environmental services provider dedicated to helping preserve the world and the natural resources that we all love and cherish. One of its particular strengths is its water services division, where its team of specialists monitor water flow and quality across the UK. By doing so, they help to protect our rivers from the kind of water pollution which last week's article quite rightly highlighted.
It is a great British success story, which, over the past three-and-a-half years – since its inception following investment from private-equity firm Palatine – has made five acquisitions, added over 60 per cent to its workforce, and made numerous improvements to its operations and services. The support from Palatine has helped Cura Terrae grow, develop and invest in a wide range of solutions to some of the industry's most challenging issues, and it is just one of many such success stories across the UK.
The reality is I could fill this article with similar examples, covering every sector of the economy and every region of the UK. Private equity supports the growth of well-known businesses including health and fitness chain David Lloyd Leisure, global entertainment company Merlin and leading software group Visma. These businesses – and many others – demonstrate the value that private equity is delivering to Britain.
In 2024 alone, £29.4 billion was invested in UK firms by private equity and venture capital, with six in ten of those companies located outside London. Across the UK, more than 2.5 million people work in businesses backed by the industry: nearly one in ten UK workers.
The old stereotype of private equity was that it invested for the short term to 'flip' a business and make a quick buck. This is just not true. The average hold period of an investment in the UK is six years – significantly longer than many equities held by large shareholders and hedge funds. And because the industry is built on performance – and on returns generated when a business grows and succeeds – there is a fundamental alignment between investors, management and employees. If the company does well, everyone benefits.
Of course, no industry is perfect. When firms get it wrong, they should be called out. And the private equity sector, like any other, must be held to high standards. But that is happening. Sir David Walker established guidelines for the industry in 2007 to increase disclosure and transparency in private equity-backed companies. These guidelines have been widely embraced, with many large private equity-backed firms disclosing information at a level that is comparable with companies in the FTSE 250. Almost all major private equity-backed firms in the UK now operate to similar standards of governance as any listed business.
The old stereotype of private equity was that it invested for the short term to 'flip' a business and make a quick buck. This is just not true
Of course, journalists are entitled to scrutinise different investment models. But when we look at the water industry specifically, the recent Independent Water Commission Final Report made clear that there are a wide variety of different investors in English water companies, including pension funds, sovereign wealth funds, global infrastructure conglomerates, asset managers and insurance companies. To suggest the water industry's challenges are due to private equity ignores the facts. Indeed, according to our own analysis, we have not found a single water company majority-owned by a private equity fund.
The simple, straightforward – and actually quite boring – reality is that the modern private equity industry looks nothing like the 1980s financiers in braces, whose business was so-called 'corporate raiding' and 'asset stripping'. The private equity industry is investing in high streets, high tech, carbon capture and café chains. It is backing biotech firms in Oxford, zero-waste start-ups in Glasgow, and specialist engineering businesses in Leicester. At a time when state capacity is stretched and public delivery often lags, private capital is quietly stepping in to get things done.
To return to our business in Sheffield: taking care of the Earth is a moral imperative. But it is also good business. That is why the private equity industry continues to invest in the UK's future – backing green growth, supporting entrepreneurs and helping rebuild prosperity from the ground up. Private equity brings more than just capital – it brings partnership, ambition and resilience. By crowding in global investment into British businesses, this industry creates a ripple effect. Investment unlocks investment, which leads to more growth and more vibrant local economies. The UK needs more of this industry, not less.