Wednesday, June 13, 2007


A 25-year veteran of private equity and chairman of SVG Capital, the biggest investor in Permira’s record €11billion ($14.8billion) fund with a commitment of €3.8billion, Mr Nicholas Ferguson, one of the most prominent figures in Europe’s private equity industry , said

“Any common sense person would say that a highly-paid private equity executive paying less tax than a cleaning lady or other low-paid workers, that can’t be right,”

Nicholas Ferguson, one of the most important figures in UK private equity business, has criticized rules on capital gains tax that allow executives at private equity firms and some hedge funds to enjoy tax rates as low as 10 percent. "I have not heard anyone give a clear explanation of why it is justified," said Mr. Ferguson

Private equity general partners are paid a base salary but earn most of their money from “carried interest” – typically a 20 per cent share of any profit from selling portfolio companies after a certain threshold. So-called “taper relief” rules allow the tax paid on this income to be reduced from the top capital gains rate of 40 per cent down to 10 per cent as long as the private equity firm holds the company for two years before selling it.

Dictionary meanings of equity :
1. The difference between the market value of a property and the claims held against it
2. The ownership interest of shareholders in a corporation
3. Conformity with rules or standards
4. Fairness

Fair ? Capitalism is never fair . And for the standard it conforms to , it is greed and accumulation .

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