Through its commitment to innovation, improving businesses and long-term growth, private equity plays a critical role in unlocking the full potential of European entrepreneurs. In doing so, it delivers many benefits for the European economy.
Private equity can help businesses to thrive in periods of strong economic growth. It can also help them to survive in downturns, protecting jobs and giving a long-term future to companies through investment and a focus on competitiveness.
To remain a positive catalyst for companies and the economy, private equity needs a balanced and well-calibrated regulatory framework that provides a stable and supportive climate for converting entrepreneurial opportunity into business reality.
The upcoming review of the Alternative Investment Fund Managers Directive (AIFMD) provides an opportunity to refine existing rules, while taking into account the specific characteristics of private equity. Proper consideration should be given to consistency, proportionality and better tailoring of the Directive's requirements to ensure that private equity firms operate in an environment that allows them to support Europe's businesses and to generate returns for their investors, such as European pension funds.
The review of the European Venture Capital Fund (EuVECA) Regulation is an opportunity to make the regime even more attractive and accessible to a larger number of small and medium-sized funds, for instance by turning it into a voluntary EU venture and growth capital label. It will be important to ensure that the framework remains proportionate and successfully complements the AIFMD marketing passport.
Smaller fund managers are rightly exempted from the full requirements of the AIFMD, given the disproportionate burden it would place on them. While this is welcome, it also means that many small EU managers have fewer options to raise funds across borders. Further enhancing cross-border marketability by addressing remaining barriers within the EU is key, and could allow smaller fund managers to unleash their full potential in support of European businesses.
A well-calibrated tax policy plays an important role in providing a favourable environment for businesses to flourish. One way to encourage further investment is by supporting companies to fund their activities through equity. This could be achieved through an allowance for equity issuance, making equity funding more appealing for Europe’s enterprises. Furthermore, such a measure would also help to address concerns over levels of debt on company balance sheets.
Through InvestEU and VentureEU, the EU should continue to provide smart support to venture capital and growth funds. Attention should be paid to the regulatory treatment of start-ups and scale-ups backed by venture capital in order to ensure that they continue to benefit from the same advantages as other SMEs.
Accelerating the expansion of a leading Pan-European omni-channel lingerie brand.25 Oct 2017
Growing a global travel search business10 Mar 2016
Transforming a European swimwear champion into a global leader10 Aug 2014
Building a global payments business from a former bank division30 May 2014
A successful turnaround of an iconic brand to reach new heights in terms of profitability, market share and employment28 Jun 2012
Read more about the private equity industry's key policy priorities for 2019 to 2024 in our Manifesto.
The EU Alternative Investment Fund Managers Directive (AIFMD or Directive 2011/61/EU) regulates the management and marketing of alternative investment funds (AIF) in the European Economic Area.
The European Venture Capital Fund (EuVECA) Regulation allows venture capitalists to market their funds to investors across the EU through a voluntary EU-wide passport without having to meet all of the demands of the AIFM Directive.
The idea of a Financial Transaction Tax (FTT) has gained traction in recent years, as policymakers looked for ways to recover the costs of the financial crisis from the sector it deemed responsible, and looked to use the tax system to create incentives.
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