The biggest challenge for private equity in 2015 is political uncertainty, said Tim Hames, director general, British Venture Capital Association (BVCA) in fund administrator Ipes’ latest client memo.
Hames points specifically to the UK where not only the election campaign will cause unrest but also the strong possibility of an inconclusive outcome may impact fund managers. He added that there is a strong chance that the Eurozone’s economic recovery will once again “splutter out” causing problems for GPs.
His European counterpart, Dörte Höppner, chief executive, European Private Equity & Venture Capital Association (EVCA) echoed this statement. She said that “with the new European Commissioners stressing ‘investment’ as a key goal for the region” ensuring appropriate regulation will be one of the top challenges facing the industry in 2015.
She added that the Capital Markets Union debate will “continue to trend as a hot topic within Europe.” The debate has been long-running but 2015 will see the European Commission prioritize the scheme which aims to harmonize non-bank financing within the EU.
Economist editor, John Micklethwait, also said politics is the biggest challenge for private equity managers. “I think the main problem will be resurgent nationalism in many parts of the globe. From Moscow to Beijing, autocratic leaders are discovering that this is a useful card to play.”
The industry has already been tested by EU and US sanctions on Russia. Since March, private fund advisers with possible ties to Russia and the Ukraine have been regularly monitoring government lists of people and businesses restricted from conducting business in the US and EU.