Promoting global capital

AIFMD

Cross-border barriers prevent companies from accessing more diverse, stable and resilient forms of funding. For private equity, cross-border structures and marketing are key. Many private equity firms, as well as their investors and advisers, will have direct and indirect connections with firms around the world. A proper and workable third country regime would have the potential to greatly enhance the investment opportunities available to EU investors.

NPPRs

It is vital that National Private Placement Regimes (NPPRs) are available for small and large third country fund managers in the short and long-term. They should be an integral part of an efficient, uniform and commercially-sensitive third country regime. Some non-EU fund managers may decide that they only wish to market their funds in specific member states, rather than the whole of the EU. Applying the full passport in these cases would not be proportionate.

EuVECA

Extending the availability of the European Venture Capital Fund (EuVECA) regime to third country funds and fund managers would be a sensible step. Europe should take the initiative in developing a regime that is open, welcoming and gives EU investors access to a wider range of managers. In return, such a move would ensure that the European economy benefits from non-EU investor capital.

Foreign direct investment (FDI)

Global investors are increasingly looking towards Europe. Almost 90% of investors think Europe has become a more attractive investment destination over recent years, according to Invest Europe’s Global Investment Decision Makers Survey 2018. This is positive testimony to Europe’s achievement in cultivating an environment conducive to investment. It will be important to ensure that a fine balance remains between introducing safeguards, such as screening mechanisms, and maintaining an overarching investment climate that is open and competitive.

Tax neutrality

With its international structure, often with multiple entities in different countries, private equity is susceptible to double taxation. It is therefore important to ensure tax neutrality between direct investments and investment through private equity funds. To that end, transposition of the OECD BEPS standards (Action 6 on treaty abuse in particular) should allow private equity funds to continue to use double tax treaties.

Initial Public Offering (IPO)

IPOs are an important route for private equity-backed companies to take the next step on their growth journey. It is important for the EU to continue promoting high-quality capital markets, including the development of a vibrant IPO ecosystem.