This week, Private Equity International attended an event hosted by the Private Equity Reporting Group, an independent body set up on behalf of the British Private Equity and Venture Capital Association.

PERG was launching its 15th set of annual reports designed to provide transparency at the UK’s largest portfolio companies. This included the introduction of a ‘one-stop shop’ platform where financial reports from some of the country’s biggest PE-backed companies are compiled.

PERG has expanded the reporting process this year to include sector-specific breakdowns. As part of its dive into the inner works of the industry, it found that PE-owned businesses outperformed public benchmarks during 2021-22, with revenue increases of 7.8 percent on average versus 2.3 percent for public companies.

The reports aim to present independently prepared information clearly and simply with maximum transparency, according to Nick Land, PERG’s chairman. They inform the broader business community and public debate on the impact of private equity ownership on large UK businesses and also help to highlight private equity’s specific contribution to the UK economy, he added.

‘Transparency’ is the key word here. PERG was established in 2008 to review the industry’s compliance with the Walker Guidelines – a framework introduced to improve the public’s understanding of PE activities and help the industry address concerns about a lack of openness. Land and BVCA director-general Michael Moore both acknowledged that the level of transparency across PE, which is “night and day” when compared with 15 years ago, still has some way to go.

PERG’s reports this week restart the discussion around private equity’s licence to operate and reputational issues, much of which can be boiled down to its level of transparency. It’s an issue we looked at in early 2020 in our deep dive on how the industry urgently needed to address the criticisms levied by the public. That same year, Hamilton Lane’s EMEA head Richard Hope called on the industry to be more transparent. The coronavirus pandemic then hit, with momentum on the issue grinding to a halt.

Is it time to revisit PE’s licence to operate? PERG’s renewed focus on transparency provides a timely reason to do so. Capital raising is coming under pressure, as our latest fundraising report shows, with final closes last year falling by more than $100 billion to $727.6 billion. With LPs breaching their allocation limits and some managers struggling to attract capital, low public opinion of the industry would be another headwind the industry could do without.

As we detailed in our Democratisation of Private Equity Report this month, individual investors are showing increased interest in the asset class. Greater transparency about fees and performance will help them better understand the nuances of an industry that espouses a superior model of company ownership and higher returns than passive public markets investing.

Perhaps most significantly, regulators are increasingly targeting private markets. Last year, the US Securities and Exchange Commission proposed sweeping changes that would target, among other things, the two issues PERG is most concerned with: reporting and transparency.

With regulators again signalling concerns over the way the industry is run, industry practitioners would do well to get ahead of the criticism.