Private Equity’s Massive UK Debt Binge Sparks Warnings of Danger
Buyout firms splurged on low-margin British consumer companies, seduced by bargain prices and cheap money. Higher interest rates are upending that wager.
A worker stacks shelves at an Asda Express.
Photographer: Hollie Adams/BloombergFor an idea of what private equity ownership can mean for ordinary people, UK grocers are a good place to start. Both Wm Morrison Supermarkets Ltd. and Asda have been laboring lately under giant debt burdens put on their shoulders by the financiers who bought them in 2021.
With the cost of servicing all that debt beginning to spiral, it’s not only the owners who have cause to worry. British lawmakers have hauled in Asda’s backers, including one of the tycoon Issa brothers and PE firm TDR Capital, at various points to grill them on everything from not passing lower petrol prices on to shoppers to the complexities of its corporate structure.