Donald McKenzie, the media-shy managing partner of CVC, one of the world’s largest private equity firms, has been called to give evidence to the Commons Treasury Select Committee this Wednesday, The Times has learnt.

Mr McKenzie is expected to replace Jonathan Feuer, CVC’s UK co-head, as one of the four private equity bosses to be questioned by the MPs. It will be the first time Mr McKenzie has spoken in public about his business.

David Blitzer, of Blackstone, Jon Moulton, of Alchemy Partners, and Peter Taylor, of Duke Street Capital, will join the CVC boss in the panel of private equity leaders facing the committee.

It will be the second successive week that the sector’s biggest names have submitted to questioning by the committee amid concern about the industry’s lack of transparency and the low level of tax paid on its multimillion-pound profits.

Last night the private equity firms Permira, CVC and Charterhouse disclosed further details of their agreed merger of Saga and the AA, after fierce criticism that previous information on the deal involving two iconic British businesses had been too sketchy.

Permira and CVC’s purchase of the AA in 2004 for £1.75 billion has become a focus point for the anger of unions and MPs over the private equity sector, after the firms shed 3,000 staff.

In a joint statement, the three firms said that the forthcoming merger was an example of their recomittment “to the long-term growth of two outstanding businesses”. The two operations will be put into a new, as-yet unnamed holding company.

The private equity firms said that the valuations put on the businesses – £3.35 billion for AA and £2.8 billion for Saga – had been based on advice from float advisers in Saga’s case and “unsolicited indicative offers received in recent months” for AA.

The valuations imply that the three private equity houses will make a £2.6 billion profit between them on the deal. Permira and CVC bought the AA from Centrica for £1.75 billion, including £550 million in cash. They have already taken out about £260 million each from the business, almost recouping their initial investment.

Last night the firms said they had made a total return of about three and a half times their original investment, putting Permira and CVC’s profit at about £960 million each. They will each invest £380 million in new cash in the merged company, putting their combined shareholding at 42 per cent. These figures do not include debt.

The new company will be financed with about £4.8 billion of new debt, which is £2 billion more than existing debt of Saga and AA as separate entities.

Charterhouse backed a £1.35 billion management buy-out of Saga in 2004. Last night’s statement said that the private equity firm, which also owns Barracuda, the pub company, and TDF, the wireless transmitter, had already taken £580 million out of the company. Charterhouse will reinvest £640 million, putting its shareholding at 38 per cent.

Management in Saga and the AA will take a 20 per cent stake in the merged company.

Permira’s investment in the newly formed company will be done through its Permira Europe III fund, which was raised in October 2003, while CVC will introduce two new investment funds. Charterhouse will invest through two funds.

The firms’ unprecedented openness about the structure of the AA-Saga deal comes as a review of the private equity industry by the City grandee Sir David Walker, instigated in March by the British Venture Capital Association, prepares to invite submissions from the sector. Interested parties will be given three months to respond. On the road

The AA

- Attended 3.6 million breakdowns in 2006, equivalent to one every 8.8 seconds

- Employs about 7,000 people

- AA Insurance has more than one million motor policies

- Its Driving School has 2,000 instructors

- More than ten million membership calls were received in 2006

- Repairers fix eight out of ten breakdowns at the roadside

- Current membership is about 15 million, making the AA the UK’s biggest membership organisation

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