“Back in 2011, I clicked into Google and typed the words ‘UK government growth agenda’ in the search field. Astoundingly I got a blank screen – and the words ‘no matches found’.”
That’s how Robert Easton, chairman of the British Private Equity and Venture Capital Association and Carlyle Group managing director, underlined the need for a more constructive approach to UK growth during a speech Tuesday. At the association’s 30th anniversary celebration, which gathered European private equity veterans along with a friendly crowd of politicians, businessmen and journalists, Easton observed that putting the economy back on track was very much talked about – but that few initiatives actually saw the light of day.
As such, the BVCA used the occasion to unveil its own “Growth Initiative”: a series of recommendations, drawn from consultations with 50 UK businesses and their private equity and venture investors, on what the government can do to help UK businesses grow faster.
Business owners and investors polled felt the most urgent priority was the UK’s growing talent gap. While many companies focus on material investment and technology, Easton said, youth unemployment and the search for talent should induce the government to develop apprenticeship and training, and relax its visa rules.
Other areas the BVCA flagged as needing reform included tax and regulation, with particular support for the country’s small and medium companies; business finance, where it said the government could do more to attract capital from banks and non-banks investors; and industrial policy, where government underwriting could put long-term energy and infrastructure projects on a more secure footing.
With public and consumer debt already at unsustainable levels, Easton said, jumpstarting growth would mainly fall to the country’s businesses – with a great role to play for private equity and venture firms. In order to provide a return to investors, firms have a very tangible incentive to boost growth at their portfolio companies, offering both useful insights and economic impetus to the broader business world. He pointed to another recent study by the BVCA showing that PE-backed buyouts had proven more resilient during the recession than non-PE backed ones.
But Easton also had a sterner message for the GPs and business leaders congregated yesterday at the London Film Museum: that the association had started to witness a decline in participation and engagement on the part of privately owned companies. “We can see it in disclosures, on the website, in the response to updating requests and the general level of communication by certain companies.”
He exhorted private equity to show more transparency, both at the firm and portfolio company level, to make the public and various stakeholders understand the central role it can play in putting industrial and economic policy back on track.
Easton’s remarks were followed by Ian Duncan Smith, UK secretary of state for work and pension, who underlined the successes of the UK’s early experiments in impact investing, as well as the broader social benefits of financial investment. Also taking a turn at the podium was rocker-turned-philanthropist Bob Geldof, who detailed founding an Africa-focused private equity fund and the need to help the world’s “forgotten half” – the proportion of the global population earning less than two dollars a day.