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Venture capital to play central role in Capital Markets Union

30 September 2015

Commission also recognises long-term benefits of private equity and infrastructure investment in its CMU Action Plan
The European Private Equity and Venture Capital Association (changes to Invest Europe 1st Oct) today welcomes the European Commission’s ‘Action Plan on Building a Capital Markets Union’ (CMU), which places venture capital (VC) at the heart of its proposals to unlock trillions of euros of financing for Europe’s economy.

Dörte Höppner, EVCA Chief Executive, says: “Venture capital finances innovation. It is the engine driving the growth of companies such as Spotify, Delivery Hero and Farfetch. To deliver more of these successes in Europe, the European Commission is right to place VC funding high on its Capital Markets Union priority list.”

The CMU Action plan, officially released today by Commissioner Jonathan Hill, highlights possible improvements to existing venture capital fund management regulation (EuVECA) and the creation of pan-European venture capital ‘funds-of-funds’ as possible mechanisms for increasing the flow of capital into high-growth businesses.
The action plan also promises to address currently inappropriate risk-weighting requirements within Solvency II for infrastructure investments and to review their application to the private equity asset class - recognising the crucial role of insurance groups in backing these long-term investments.

Höppner adds: “The Commission’s recognition of the role of insurance companies in providing private capital to finance growth is to be welcomed. Its intention to revise the Solvency II regulatory risk weights could facilitate greater investment in key services such as airports, energy and schools and we would like to see this extended to cover both direct and indirect infrastructure investments.”

The CMU Action Plan forms part of the European Commission’s strategy to generate jobs and economic growth by stimulating investments and mobilising capital across Europe. Private equity has invested 350 billion EUR into 28,000 European companies since 2007. Among the CMU Action Plan’s specific aims is the removal of cross-border barriers to such investment.

Höppner concludes: “We greatly support the consultation to remove unjustified barriers and encourage free flow of capital across borders. Around half of the private equity invested in Europe comes from investors in places such as the US and Asia. We are therefore keen for CMU to have a global dimension, as well as a European one, so that investors can access the best opportunities, wherever they are in the world.”

“The Commission’s plan offers us the chance to develop world-class capital markets in Europe, and ensure companies of all sizes have access to a diverse range of funding sources.”

For more information, please read Venture capital takes centre stage in Capital Markets Union Action Plan by EVCA Public Affairs Director, Michael Collins.                              

About Invest Europe (as of 1st October)

Invest Europe is the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors.

Our members take a long-term approach to investing in privately held companies, from start-ups to established firms. They inject not only capital but dynamism, innovation and expertise. This commitment helps deliver strong and sustainable growth, resulting in healthy returns for Europe’s leading pension funds and insurers, to the benefit of the millions of European citizens who depend on them.

Invest Europe aims to make a constructive contribution to policy affecting private capital investment in Europe. We provide information to the public on our members’ role in the economy. Our research provides the most authoritative source of data on trends and developments in our industry.

Invest Europe is the guardian of the industry’s professional standards, demanding accountability, good governance and transparency from our members.

Invest Europe is a non-profit organisation with 25 employees in Brussels, Belgium.

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