BVCA’s Walker warns private equity about disclosure code

Source: Exec Digital UK

Date :14/01/2008 10:15:32

Head of the British Private Equity and Venture Capital Association warns the industry will face the “blunt instrument of regulation” if it doesn’t prove it is embracing the voluntary disclosure code.

Simon Walker, who took over as head of the British Private Equity and Venture Capital Association two months ago, told the Financial Times that, with the sector facing tougher times, the need for fuller disclosure was even greater.

Not only to build public support but also to alert people to the consequences of a downturn for companies owned by private equity firms.

He said: “Are some investors going to suffer? Yes that is possible. All the more reason for us to explain how private equity works.”

Private-equity

Said the Financial Times: ‘Mr. Walker warned that some buy-out firms had told him they planned to leave London if the government pressed ahead with plans to raise taxes on a large part of their earnings.’

He said: “Private equity needs to know where they will stand five years from now...uncertainty or unpredictability will undermine that. We are all waiting to hear what the chancellor’s final position will be on capital gains tax.”

BVCA review

Under a review of the industry in November by Sir David Walker, portfolio companies owned by private equity will be required to disclose the private equity companies that own them and the senior managers and advisors.

In addition, they will also have to give details of the company’s accounts in half-year and full-year reports.

Meanwhile, the private-equity firms that own them will give details about their corporate governance, describing their structure and investment approach.

Capital gains

Buy-out firms were criticised last year after bidding for some of the UK’s best-known companies, leading to cries of asset-stripping, tax-dodging and job-cutting.

As a result, the government reacted by increasing the base rate of capital gains tax from ten percent to 18 percent, saying it would make private equity pay a fairer share of tax.

January 14, 2008