About private equity

How private equity invests in privately-owned businesses, supports jobs and creates prosperity.

Members

Login to access your exclusive member-only content and account information.

Login

Not a member? Join us

  • Operate to the highest level of professional standards
  • Access authoritative industry research and data
  • Navigate the complex EU regulatory environment
  • Network and engage with industry leaders
News & opinion
Opinion
Share

Releasing the potential of a Capital Markets Union

18 Feb 2015

The drive towards a Capital Markets Union got well and truly under way with today’s publication of the European Commission’s Green Paper, which identifies private equity and venture capital as playing a key role in the Europe’s economy.

The publication of the paper is an important moment in itself. It comes just three months into the leadership of the new European executive and outlines Financial Services Commissioner Jonathan Hill’s vision for more effective capital markets across the continent. It also reinforces the prevailing mood in European politics that more must be done to encourage economic growth by getting capital into businesses that have been struggling to access both loans and equity investment.

The Green Paper explicitly names private equity and venture capital as an important source of direct financing. Indeed, between 2007 and 2013, European private equity and venture capital invested €307bn in 25,000 companies, employing more than 8 million people.

To unlock more of this essential financing, the EU should aim to free up the enormous pool of capital sitting with institutional investors, enabling it to flow across borders to companies that desperately need it. This means having a prudential capital regime for insurers, pension funds and banks that encourages them to invest in long term assets. Yet, there are several pieces of key financial legislation that may have quite a chilling effect.

As part of the drive to create a single market, it is essential that Solvency II for insurers, the IORPD proposal for pension funds and CRD IV for banks, make a proper assessment of the capital requirements for investing in private equity and venture capital, based on independent academic research with a rigorous evidence-base.

Investors need to be given the freedom to access the best investment opportunities, wherever they are in the world. Thus an AIFMD marketing passport regime that gives long-term investors easy access to the best fund managers, whether in Europe or beyond, is a must.

We must also remove barriers created by national governments that discourage EU fund managers from raising funds in other Member States; otherwise we are keeping capital ‘locked’ behind national borders.

Funds are an excellent way to channel investment from institutional investors to companies but we need a legal regime that encourages funds to operate. It’s therefore legitimate to ask whether AIFMD, for example, due for review in 2017, got the balance right when imposing new requirements that were designed to protect institutional investors but which inevitably lead to higher costs and lower returns.

There is no shortage of capital and no absence of investors looking to find a productive way to invest. Our challenge is to connect those investors with the companies that need backing. Private equity is one such connection. It is encouraging that the Commission recognises this role in its discussion document.

Invest Europe strongly welcomes this initiative and stands ready to work with the Commission and other participants in the capital markets to ensure that Europe leads the world in providing businesses of all sizes access to finance from a diverse range of sources.

Dörte Höppner, Chief Executive Officer, EVCA

Want to discuss?

We are always keen to hear from you.

Share

What can I do to manage cookies stored on my computer or phone?

You can accept or refuse cookies. Accepting cookies is usually the best way to make sure you get the best from a website.

Most PCs automatically accept them but you can change your browser settings to restrict, block or delete cookies if you want. Each browser is different, so check the 'Help' menu of your particular browser (or your mobile phone's handset manual) to learn how to change your cookie preferences. Many browsers have universal privacy settings for you to choose from.

Help on how to set and customise your cookie settings for your browser

How to manage cookies in Internet Explorer

Cookie settings in most versions of Internet Explorer can be found by clicking the tools option and then the privacy tab.

How to manage cookies in Firefox

Cookie settings in Firefox are managed in the Options window's Privacy panel. See Options window - Privacy Panel for information on these settings.

How to manage cookies in Chrome

Click on the spanner icon on the toolbar, select settings, click the under the bonnet tab, click on content settings in the privacy section.

How to manage cookies in Opera 

You can manage cookies in Opera if you Click on settings, then Preferences, then Advanced and finally Cookies

How to manage cookies in Safari

Choose Safari, then preferences and then click security. You should then be able to specify if and when Safari should accept cookies.

To manage cookies on your mobile phone please consult your manual or handbook.

Get more help about how cookies work with specific browsers.

What happens if I don't accept cookies?

If you decline cookies, some aspects of Invest Europe site may not work on your computer or mobile phone and you may not be able to access areas you want on the website. For this reason we recommend that you accept cookies.

What happens if I delete my cookies?

If you delete all your cookies you will have to update your preferences with us again and some aspects of our site may not work.

What happens if I change computers or mobile?

If you use a different device, computer profile or browser you will have to tell us your preferences again.

If you'd like to learn more about cookies in general and how to manage them, visit aboutcookies.org.

We can't be responsible for the content of external websites.

Opt-out of cookies

Login

Join today

This is for members only. To view in full login or join Invest Europe today.