One of David Cameron’s most influential aides was a key adviser on a private equity deal which has left 31,000 vulnerable elderly people facing the prospect of losing their care homes. As co-head of UK investment banking for Morgan Stanley in 2006, Jeremy Heywood, who is now Permanent Secretary in Downing Street, was responsible for the floatation of care provider Southern Cross on the London Stock Exchange.
Heywood, who has also worked for Gordon Brown and Tony Blair, oversaw Morgan Stanley’s role as sponsor, global co-ordinator, book runner and lead manager for the floatation of Southern Cross Healthcare Group. Prospectus documents for shareholders seen by Scrapbook endorse a “sale and leaseback” model which has led ultimately to the company being unable to meet inflated rent bills for 753 properties and the threat of elderly residents being turfed out of their care homes.
Private equity firm Blackstone made £640 million on secret financial deals related to Southern Cross while company executives also trousered millions. As the disaster calls into question the role of capital in the provision of social care, it seems some of the fingerprints on this dodgy financial architecture can also be found in 10 Downing Street.
Did Jeremy Heywood receive a bonus on the deal which has left Britain’s largest care home group teetering on the brink?