At a Treasury Select Committee hearing today, CVC managing partner and co-founder Donald Mackenzie said CVC has been forced to sell off some of its Debenhams shares as a result of troubles at the retailer.
Mackenzie revealed the private equity group has 'suffered a reputational risk' from its investment in the chain. CVC is in discussions with Debenhams' management, but the overall effect had been very negative, he added.
In April, Debenhams shares took a hammering as the company announced its third profit warning since its flotation last year, after two years of private equity ownership by CVC Capital, Texas Pacific Group, and Merrill Lynch.
In the past few weeks, the retailer is understood to have been in talks with several major European retailers about the possibility of a merger. According to sources, Debenhams chief executive Rob Templeman is very keen to exit the troubled business.
Separately, Bank of England director Sir David Walker told the committee that entrepreneurs, including Sir Philip Green and Sir Richard Branson, should have to apply the same standards of transparency and disclosure as he has suggested for private equity. He said that reports and accounts should be made publicly available after four months, rather than nine months, as currently specified by the Government,
Additionally, Duke Street Capital head of private equity Peter Taylor said the group left too much debt in DIY chain Focus, after owning it for 17 years. He said: 'None of us could have foreseen the downturn in the DIY market.'