When the stock market is shaky, when inflation is rising and the confidence of investors is falling, the sharks begin to circle.

Marauder banks based overseas and international private equity companies

When the stock market is shaky, when inflation is rising and the confidence of investors is falling, the sharks begin to circle.

Marauder banks based overseas and international private equity companies start to look for quick profits. This is what financial predators do — they sniff for easy pickings.

A good example is the proposed buyout bid by the American takeover specialists, Bain Capital.

It has set its sights on the 178-year-old LV Financial Services company, a British institution which for most of its long life was known as the Liverpool Victoria mutual society.

Bain Capital, based in Boston, Massachusetts, plans to offer £100 to every one of the 1.2 million eligible LV members — that is, the customers who have life insurance and other policies with LV.

Lord Heseltine (pictured): Predators circling LV are offering 30 pieces of silver for an insulting and disreputable deal

Derisory

That sum, with a slightly bigger payout to members who have ‘with-profits’ policies, represents a total of 40 per cent of the proposed sale price of £530 million.

Not surprisingly, many LV members regard the offer as derisory.

I am not a member. However, I believe fiercely that the sale should not go through. The £100-a-head deal on offer for members is bad enough, but it is not my primary concern.

More important to my mind is the fact that a significant and long-standing British company is in danger of being sold off and broken up for private profit.

This is very much not in the national interest.

We cannot say for certain what Bain Capital’s intentions are, but we do know they will not be charitable.

Venture capitalists exist to make money, not to preserve traditions or look after the best interests of small investors.

We can reasonably assume that its aim is to make a sizeable profit from a company already shouldering a debt burden of £350 million.

This is a figure that has been publicly confirmed by LV’s chief executive, Mark Hartigan, who says: ‘We can’t raise any more debt because we’re maxed out.’ Mr Hartigan has said that LV does not have enough money to invest in the business to remain competitive, that if the company is left as it is, profits to savers will have to be reduced, and that the best option is to sell to the highest bidder.

Many members are somewhat sceptical of Mr Hartigan’s analysis.

They suspect that, in the event of a take-over, he will keep his job on enhanced terms, which would potentially include stock benefits amounting to millions.

I don’t know whether such scepticism is justified in this instance, but it is an incontestable fact that private equity bidders frequently offer sweeteners to executives when planning a takeover.

A hostile buyout is always fraught, after all. Much easier to get the board of executives onside first.

So there’s no doubt there are a number of unanswered questions about the remuneration of executives in such takeovers.

All the information about ‘who makes how much’ should be in the public domain.

In the case of LV, there is another deeply disconcerting factor — one that should be thoroughly investigated before any deal goes through.

According to the firm’s Articles of Association, its house rules, at least half of LV’s members must respond to a ballot on the takeover, and of those voters at least three-quarters must be in favour.

This high bar is there for a very good reason — to protect the mutual from a takeover that could be to the detriment of members.

And it is highly unlikely to be passed as it stands.

Which explains why the board has mounted a challenge through the courts to scrap the rule.

The Daily Mail’s City editor, Alex Brummer, calls this a piece of election gerrymandering worthy of Donald Trump. I agree, and I would add that it’s legal jiggery-pokery to boot.

Clearly, none of this should be allowed to happen until a searching investigation has been conducted.

Now is the time for the Financial Conduct Authority [FCA], which oversees the behaviour of companies such as LV, to show us whether it has the power to act, or if it is merely a toothless watchdog.

Liverpool Victoria is part of a crucial tradition woven into Britain’s social fabric, one that has helped millions of people to save and stay solvent.

It was founded in 1843 offering ‘penny policies’, with agents going door-to-door to collect very small, regular payments from working class and lower-middle class households — the homes of the decent masses, who were not wealthy but who valued their independence and their dignity.

Often, these policies were set up to pay for funerals, to avoid a pauper’s burial. Today, the company offers life insurance and pensions, as well as savings plans.

What mattered most was that it was not a business run solely to generate profits. The working poor were looking after themselves, rather than allowing themselves to be exploited.

Aggressive

That’s why I find the Bain Capital offer so insulting and disreputable. It is the equivalent of 30 pieces of silver, which evidently translates at today’s prices to £100. I urge all LV members to think about that before they vote.

But my concerns run much deeper than that. If this country allows predatory takeovers to swallow our national assets piece by piece, we shall all be impoverished.

When I was president of the Board of Trade during the mid-1990s, a submission was put to me regarding two of Britain’s biggest companies, Rolls-Royce and British Aerospace.

Both were being eyed by investors looking for short-term profit from an aggressive takeover.

But both were protected by a mechanism known as a ‘golden share’, owned by the Government.

It is not a controlling share — but it does enable the relevant secretary of state or someone else acting on behalf of the Government to block any foreign buy-out.

I believed then, as I believe now, that this is essential to our national security.

The idea of either Rolls-Royce or BAE in foreign hands — given the vital role they play in maintaining our defences — is unthinkable.

It would jeopardise the safety of everyone in the country.

I was under pressure to scrap the golden share, on the spurious basis that it diminished the ability of these companies to trade.

Nearly 30 years later, it is plain that keeping the Government’s stake has had no harmful effect and has protected both industries from the vagaries of the takeover market.

LV’s chief executive, Mark Hartigan, pictured, confirmed the company is shouldering a debt burden of £350 million

Heritage

It makes no more sense that LV should be vulnerable to a cut-price takeover. The FCA has to do more to prevent it.

Britain is the only country which allows a free-for-all, in effect, for ownership of our biggest companies.

All other countries, starting with the United States, have scrutinising processes which assess not just the financial implications of a takeover but safeguard the national interests that are at stake.

The Government should conduct a worldwide survey of the regulatory regimes in all of our competitors’ economies. It should identify the best practices and adopt them.

We want to see large and successful companies stay in this country: British executives making decisions for thousands of workers employed domestically and perhaps millions of customers worldwide.

This is most essential for our strategic companies, the ones that operate in sectors such as defence, cutting-edge technology and space.

But it has considerable overlap with the general run of large companies, especially those in the financial sector.

LV and companies like it are part of our heritage. We must defend them.

Michael Heseltine was president of the Board of Trade, 1992-1995.