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Guardian owner hires private equity firm fined for role in overcharging NHS for drugs

The owner of the Guardian has handed a lucrative contract to a private equity firm fined for its part in an NHS price gouging scandal.

The Scott Trust has selected HgCapital as one of three new private equity managers to oversee investments at its endowment fund as it expands into riskier alternative investments.

HgCapital was last year fined £8.6m for its part in a scandal centring on drugmaker Advanz.

Advanz inflated the price of its thyroid tablets by up to 6,000pc over the space of a decade, the Competition and Markets Authority (CMA) concluded after an investigation.

The regulator said the company had charged “excessive and unfair prices” for liothyronine tablets by taking advantage of limited competition in the market from 2007 onwards.

HgCapital was slapped with the smallest proportion of a total £100m penalty. Advanz was ordered to pay £40.9m and HgCapital’s co-investor Cinven was fined £51.9m.

Advanz was originally two separate entities, Mercury Pharma Group and Amdipharm. 

HgCapital acquired Mercury for £179m in 2009 and sold it to Cinven for £465m in 2012. Cinven, another private equity company, then merged it with Amdipharm to create Advanz.

Andrea Coscelli, chief executive of the CMA, said at the time: “Advanz’s decision to ratchet up the price of liothyronine tablets and impose excessive and unfair prices for over eight years came at a huge cost to the NHS, and ultimately to UK taxpayers.”

Cinven said it “strongly disagrees with the CMA’s findings”, while HgCapital has not commented. All three parties fined are appealing, with a hearing due to take place in September. 

Last year’s expansion into private equity by the Scott Trust came despite the Guardian criticising the takeover of supermarket chain Morrisons by buyout giant Clayton, Dubilier & Rice (CD&R).

In the past the publisher was criticised for its involvement with another private equity firm, Apax, which used offshore ownership vehicles despite the Guardian campaigning against them.

A spokesman for Guardian News and Media said: “The Guardian’s ultimate owner, the Scott Trust, holds a range of investments. Guardian journalism is and has always been independent and free of any commercial consideration.”

The Scott Trust’s annual report shows it navigated recent stock market turbulence well, with its total value swelling from £1.1bn to nearly £1.3bn.

Last year, the owner of the left-leaning news publisher said it would seek larger returns by allocating more of its funds to “illiquid assets”, including private equity.

HgCapital was labelled a “top tier European software specialist” and was one of three fund managers selected by the Scott Trust.

Headquartered in London, HgCapital also has offices in Munich and New York and manages more than $40bn of client investments.

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