UK - New research highlights impact of private equity dividends

Dealogic reports that private equity firms are loading companies they buy with debt to give themselves big paydays before turning the companies around for sale. Last year's payout is three times that of 2004, according to the firm.

The research cites the example of department store Debenhams, which was bought by CVC, Merrill Lynch Private Equity and Texas Pacific for £1.7bn in 2003. The partners took £130m in dividends just months later.

The practice of paying dividends early, instead of waiting for the sale of the business, began in the UK only in 2003. Low interest rates made bankers less wary of high debt reports Dealogic.

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