A report on Monday accused Private Equity Groups of producing disappointing returns while charging their investors fat fees amid glaring conflicts of interest.

The attack makes the case that the industry has underperformed stockmarkets, taken excessive risks and overcharged investors.

The report from the Centre for the Study of Financial Innovation, a London-based think-tank, is likely to reignite the debate about the social value of leveraged buy-outs.

The study will also state that taxpayer money is underwriting buy-outs in the form of investment by public pension funds and debt financing from state-guaranteed banks, meaning the industry should be more transparent about its performance.

The buy-out industry has ­dismissed the report. Simon Walker, chief executive of the British Private Equity and Venture Capital Association, said: “I think it is unbalanced and it is a beat-up.”

The report concedes: “Private equity can help an economy, in principle.” However, it is mostly critical. Buy-outs are “just another variation on the theme of ‘heads they win, tails you lose’”, says Peter Morris, its author and a former Morgan Stanley banker.