Ethan Oshoko
You’ve likely read the term “private equity” in headlines over the past few years, or heard the term uttered by a news presenter giving an update on the acquisition of an ill-fated business like Toys R Us or Debenhams. The financial industry in general can seem like a highly abstract thing, more relevant to City investors than the average person on the street.
Although private equity appears abstract, it has real, material effects on our lives. Behind almost every decaying high street in the UK, there’s a story of financial investors playing roulette with our communities and jobs, enjoying the gains while passing the risk and losses onto workers and townsfolk.
Two of the major supermarkets in Hastings & St Leonards are owned by private equity. Morrisons was taken over by private equity group CD&R (Clayton, Dubilier & Rice) in October 2021. Asda was purchased by the private equity firm TDR Capital in October 2020.
Subsequently, both Morrisons and Asda have announced hundreds of job cuts, with Morrisons cutting 300 jobs in March 2025 and Asda cutting 475 jobs in November 2024. Efforts to maximise the profit of the companies in reality means price hikes and staff cuts, hurting shoppers and workers alike, for the sake of providing investors a “healthy” return.
This is not an unfamiliar story. Frequently, private equity takeover results in already ailing companies being saddled with debt, cutting jobs and providing customers with an inferior service, before the failing company lapses into bankruptcy.
The pharmacy Boots was bought by private equity firm Sycamore Partners in March 2025. The pub chain Yates is operated by Stonegate Pub Company, which is owned by TDR Capital. Debenhams closed its Hastings branch in 2021, collapsing under the weight of the debt piled upon it by the private equity firms who owned it. One has to wonder whether the other high street shops newly acquired by private equity will suffer the same fate.
But private equity doesn’t just gamble on supermarkets and high street chains. Southern Water, which repeatedly leaks sewage into our seas and rivers, was acquired by Greensands Holdings Limited, in 2008, a company which is in turn owned by private equity firms, pension funds and investment funds. Southern recently doubled its CEO’s pay to £1.4 million, while also increasing bills by 47%.
But why would people continue to invest in private equity if it so often fails? Investment bankers would have you believe that private equity is a complex instrument which is beyond the average person’s understanding; as though it were a sort of alchemy which only those who possess a degree in Finance could possibly understand.
It’s actually pretty simple:
Private equity (PE) firms are investment companies like any other. Investment companies generally purchase stocks, shares, assets, even physical commodities like gold etc, on the behalf of their clients, in order to provide a return. private equity firms are unique in that the asset they invest in is generally existing companies. Rather than simply owning shares in the company, PE firms take an active role in managing the company.
Although the name “private equity” seems pretty abstract, the “Private” refers to investing in companies which aren’t traded in the stock market (which would make them “Public”), and the “Equity” aspect just refers to the capital the firm already holds, which is used to take out the loan in order to buy the company. It’s a bit like the deposit you pay when taking out a mortgage on a house.
Here’s the alchemical part. Unlike taking out a mortgage, the debt used to finance the buyout comes from the company being bought itself. Which is just as absurd as it sounds. It is the equivalent of taking out a mortgage on a house, but instead of you having to make the mortgage payments, the house has to pay its own mortgage. We talk about businesses going bankrupt, but we don’t talk about houses going bankrupt. It’s the owner of the house who suffers the consequences of being unable to make the mortgage payments. However, as businesses can be treated as though they were individuals, the private equity firm can leave the business saddled with debt, all while making dividend payments to the clients whom they are investing on the behalf of, and of course, they get to pay themselves a hefty management fee.
This is why PE firms so frequently buy out companies which go bankrupt, and yet, people are always happy to invest with them; they are essentially gambling with other people’s money. If their gamble pays off, they win big, they sell off the company and make a hefty profit. If they lose the gamble, the business declares bankruptcy, and the PE firm leaves the scene unscathed, as they wash their hands of the mess they caused, not having to pay the debt they incurred. The debt is left to be paid by the workers who end up with their hours cut or losing their jobs, and the citizens who have to walk down the high street with boarded-up shops and rising prices. Like a casino, the house always wins.
The following is a non-exhaustive list of companies at least partially owned by private equity which operate in Hastings, at time of writing:
- Morrisons (CD&R)
- Asda (TDR Capital)
- Yates (TDR Capital)
- Boots (Sycamore Partners)
- Waterstones (Elliott Investment Management)
- Southern Water (Greensands Holdings Limited)
There are also likely a number of services which operate in Hastings & St Leonards which are provided by companies owned by private equity, but due to their more complex structures, they are harder to uncover. This includes nurseries, NHS services, dentistry and care homes. G4S, which is owned by private equity firm Warburg Pincus, holds millions of pounds worth of contracts with the NHS.