Up with private equity

Not a moment too soon, the BVCA has released a study detailing private equity’s many successes in the UK. Philip Borel reports.

Possibly heading off detrimental regulatory changes, the British Venture Capital Association (BVCA) recently published a report that charts the development of the UK private equity market and its role within the UK and broader economy.

Vince O’Brien, chairman, BVCA

Titled “Private Equity – a UK Success Story”, the report is intended to demonstrate to all – including regulators – how the industry has thrived compared with private equity markets in the rest of Europe.

In the study, BVCA chairman Vince O’Brien writes: “We…hope to show investors looking at Europe why so many institutional investors choose UK-based firms as their private equity managers and why the UK private equity industry, and London in particular, has become such an important gateway to the European private equity market.”

O’Brien also notes that the UK private equity industry “operates in a highly competitive and commercial environment. We cannot take our position for granted.”

Among the arguments of the report is that the user-friendly nature of UK limited partnerships has fostered the growth of private equity.

The study was put together by IE Consulting, an affiliate of Incisive Media. Much of it contains data previously released by the EVCA, BVCA and Thomson Financial.

Lately, private equity practitioners in the UK have had much to worry about with regard to the local regulatory regime. The country’s Financial Services Authority recently set up a taskforce to study private equity. Specifically, the FSA wants to determine what degree of risk the rise of private equity poses the broader financial markets.

More recently, UK general partners have gotten a scare related to potential changes in the way carry is taxed in the country.

Now more than ever seems a useful time to remind regulators that private equity has been a good thing for the UK. It wouldn’t be surprising to see GPs in other regulatory-challenged countries come up with similar types of pro-private equity propaganda.

This article was first published in the April 2006 issue of sister magazine Private Equity Manager (www.privateequitymanager.com).