BVCA publishes fundraising guidelines

A task force has offered six recommendations to help firms avoid embarrassment for the industry over affiliations with dubious sources of capital.

In a report published today, a task force appointed to examine fundraising guidelines set up by British Venture Capital Association (BVCA) chairman Edmund Truell has made recommendations to the private equity industry as to how best to avoid embarrassment over inadvertant involvement with money laundering. The task force, chaired by BVCA executive director Jennifer English, suggested that because the industry has long investment time frames and is relatively illiquid, it faced a relatively low risk of being targeted by money launderers.

The recommendations published today include the need to be aware of the black lists of individuals and countries and that if there is any doubt over a potential source that it be investigated thoroughly.

Truell said he was confident that members already took great care about these matters. He added: “As I said when I launched this task force, it is of immediate and urgent concern to me that this industry is not only clear of questionable sources of funding, but is seen to be so.”

The recommendations come as private equity firms raising funds at present are having to cast their net wider as previous investors balk at further investments. Institutional investors are busy wrestling with revised asset allocation models prompted by the downturn in public equity markets and the loss in confidence since September 11. Many are taking refuge in other asset classes.

High net worth individuals, unconstrained by allocation rules, have become more significant contributors to private equity funds, particularly venture capital funds, and it is against this context that the fund raising guidelines may be especially pertinent.