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March 2, 2024
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Private Equity

EG and Asda’s private equity overlords summoned to Parliamentary hot seat


Senior executives from secretive private equity investor TDR Capital are to be brought into the full glare of political scrutiny this week as part of an ongoing enquiry into private equity’s impact on the UK retail sector.

Managing partner Gary Lindsay, chief operating officer Blair Thompson, and deputy general counsel Emma Gilks will be questioned as part of a probe into private equity’s impact on the retail sector by the Business and Trade select committee on Tuesday (9 January).

Though the setting will be unfamiliar to them, they will be accompanied by Michael Moore, chief executive at British Private Equity & Venture Capital Association (BVCA), and a former Liberal Democrat minister in the 2010-2015 coalition government.

TDR Capital has backed the Issa brothers, Zuber and Moishin in their rapid expansion of Euro Garages and their ambitious acquisition of Asda in February 2021, 

It follows evidence given by both trade union GMB, who represent Asda staff, and the Issa brothers and their finance team at a committee session before Christmas, but TDR Capital, who co-own the supermarket giant, did not attend.

In those sessions left wing Labour members of the committee such as Ian Lavery MP (Wansbeck, Co Durham), Andy McDonald MP (Middlesbrough) and Charotte Nichols MP (Warrington South), asked detailed and persistent questions about the debt levels of both EG and Asda, and why the ultimate ownership resided in the tax haven of Jersey, while other key parts of the complex structure sit in an offshore business called “Phantom”.

In one interaction, Lavery pressed on the increased in liabilities from £2 billion in 2019 to £3.2 billion—”that’s a huge increase—in your 2022 accounts. The interest payments related to leases have increased by almost three times in the same period. How have the liabilities impacted on the business?”

In reply group finance director Michael Gleeson admitted that the disposal of warehouses was one of the ways TDR and the brothers financed the acquisition.

In one later interaction Nichols asks Issa: “You do not believe that it is bad PR, when you are asking us to trust the business, to have a section of your investment structure named something that is synonymous with lies, deception and deceit—Phantom?” 

Issa replies: “I can assure you that we are absolutely transparent. We are great custodians of this iconic British brand.”

Even Conservative member of the committee Mark Pawsey MP (Rugby) observed that “phantom” was an “extraordinary” choice of name and he pushed them on the failure to recruit a chief executive for Asda.

The hearing is unlikely to be any less comfortable for TDR, with added pressure from trade unions on the brink of possible strike action at the retailer.

Nadine Houghton, GMB National Officer, who also gave evidence, said: “It’s right that MPs will finally get the chance to hold TDR Capital to account on their co-ownership of Asda.

“Too often shadowy private equity bosses are able to dodge scrutiny and do their dealings behind closed doors.

“But workers on Asda’s shop floor deserve answers from private equity owners too, especially while Asda’s market share falls and debt levels remain worryingly high.

“Asda is part of our country’s national infrastructure. It is vitally important to get the full story from its bosses.”

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