How would you define your role as BVCA chairman?
Firstly, let's make clear that private equity is still a very successful investment industry and it is important that we don't lose sight of that, regardless of the current economic difficulties. Our members are still delivering the returns. Against that background of continued success, my job is to maintain the profile of the industry and to make sure it is properly represented in the media and to government. Secondly: we want to make our presence felt in Europe. Europe is committed to creating an entrepreneurial environment that is second to none in the world. We want to have an impact on that debate.
What are the main points of debate in Europe and what can the BVCA do?
A lot of the large private equity fund managers are based in the UK and they are investing across Europe. We are working in tandem with the European Venture Capital Association (EVCA), lending our weight to help the EC to achieve its aims. We're also working hard to make sure Basle II does not harm the industry. It is not yet clear how damaging the capital adequacy requirements will be to banks looking to invest in private equity.
There is a common goal to have a consistent set of valuation guidelines and we are all working together. EVCA is on the same page as us. Sure there are historical differences, but we are working hand-in-glove. The BVCA just happened to be the first to start a review and it is a very broad exercise with a wide consultation. But already we have had national institutions come back and say they are adopting the working party guidelines. We welcome that and we want to work to get something that is internationally acceptable and EVCA is participating.
Are there any other areas the BVCA would like to see changes from the government?
It is disappointing that the Chancellor did not heed our recommendations on venture capital trusts. We are pleased that the government has asked for a review of SME funding. But the level of VCT funding has dropped dramatically and something needs to be done now or a generation of small, fastgrowing companies, the economy's life-blood, will not get funded. It is not something you can leave for two to three years.
What is the BVCA doing to help government understand the importance of the industry?
The industry is looking for long-term return. In the current economic climate we have a real opportunity to knock the argument on the head: private equity can deliver outperformance in good times and bad.
Our reports on investment activity and performance come out every year and they are very thorough and reliable, the best in the world. We will be producing more research, along the lines of our two most recent reports: one analysing the economic impact of VCTs and one helping our members to understand institutional investors better. We have launched a poll of our members to gauge their opinions on the business climate. The reports all provide information for our members, but they also help us to target issues for us to campaign.
What is the issue of the moment?
Well, in our recent poll 85 per cent found the climate of the last three months unfavourable for fundraising. The largest sources for fundraising are banks, insurance companies and pension funds and they have all been hit hard by the global economic uncertainty. But their appetite for the asset class remains strong with nearly 40 per cent of them looking to increase their allocation. For investors valuation guidelines are key. They are concerned that they can understand and most importantly compare the way managers report.
What can the BVCA do to help the industry help itself?
The UK is a great place to do private equity, the best in Europe. But there is still room for improvement. The BVCA wants to see an abolition of taper relief. I also want to promote how professional and how well run our industry is. That's where the BVCA can play a role. Over the past two years attendance at our training courses has risen 45 per cent. The non-executive directors course was launched last year; we were ahead of the Higgs review.