Publications
& Policy

In this response the PAE details the industry's concerns regarding the scope of the Key Information Document Regulation and the need to adapt it to sophisticated investors. It also highlights the irrelevance of existing performance scenarios for closed-ended and illiquid funds.

EIF: This European Small Business Finance Outlook (ESBFO) provides an overview of the main markets relevant to EIF (equity, guarantees, securitisation, microfinance)2. It is an update of the June 2018 ESBFO edition. We start by discussing the general market environment, then look at the main aspects of equity finance and guarantees/SME Securitisation (SMESec). Finally, before we conclude, we briefly highlight some important aspects of microfinance and Fintech in Europe.

The H1 2018 activity data report provides a semi-annual review of fundraising, investment and divestment trends for European private equity and venture capital activity. Please note that this data is preliminary and subject to change.

The findings of a survey of investors from the US, China, France, Germany and the UK. It outlines opinions on issues important to investors, such as capital markets strength, innovation and sustainability, and shows strong appetite for European investments.

While challenges remain in the UK economy, such as low productivity and continued political uncertainty, the UK’s private equity and venture capital industry has demonstrated its resilience by continuing to deliver substantial amounts of cash distributions to investors. Over the longer term, private equity continues to comfortably outperform public markets. The overall since-inception return has been steady, increasing to 14.5% in 2017 and demonstrating significant levels of stability in overall returns. Against a backdrop of political uncertainty in the UK and abroad, the industry continues to grow with all of the funds covered in the survey generating one-year IRRs of 38.5%. This compares favourably with the FTSE All-Share of 13.1% for the same period.

This study presents the second part of the results from the first EIF VC Survey, a survey among venture capital general partners (GPs)/management companies headquartered in the EU-28 and some additional countries (mainly Norway, Switzerland and Turkey). The surveyed population includes both companies in which the EIF has invested as well as companies in which the EIF has not (or not yet) invested.

"Investors can capture more value by focusing on three best practices in private equity portfolio company exits."

In this response we outline several concerns regarding the EBA suggested approach to define the concepts of “investments in private equity” or “investments in venture capital firms” in the context of Article 128 of the Capital Requirements Regulation, as the proposed definitions could create more confusion than clarity, disicentivise banks' investment into private equity and venture capital funds and create a negative precedent for the industry in other legislation.

An Invest Europe study into private equity activity in Central and Eastern Europe. This report provides annual private equity and venture capital fundraising, investment and divestment statistics for the private equity markets of the CEE region in 2017.

An in-depth study which outlines the tax environments for the private equity and venture capital industry around Europe, carried out in association with KPMG.

An introduction to the voluntary passport regime offered by the revised European Venture Capital Fund Regulation.

The Invest Europe Annual Report provides an overview of Invest Europe's activities during the 12 months to June 2018 in fields including public affairs, data & research, events and communications. The report includes a financial statement.

This consultation response explains that problems may arise as under the new standard, unrealised gains/losses would be immediately reflected in the Profit and Loss Statement (P&L). We propose flexibility to allow recycling for investors, i.e. to recognize unrealized gains and losses in Other Comprehensive Income and then recycle to the P&L, or if it wished to recognize unrealized gains and losses in the P&L straight away, then this would avoid unrealised gains/losses being immediately reflected in the P&L while not enabling the investor to use recycling as an earnings management tool.

McKinsey & Company: For years, bond financing was largely favored only by the largest US corporations. But over the past ten years, companies around the world have joined in, giving corporate bond markets outside of the United States new life. This is a long-awaited development that indicates a welcome diversification of global corporate funding and the potential for more financial stability. But the bull market in bonds has also brought some risks. The fact that corporate debt has grown nearly as much as government debt over the past decade is cause for closer scrutiny of the sustainability of the market, if not concern. Our analysis shows that some borrowers with little capacity for a downturn in their finances have accessed the market; we may see a rise in defaults in the coming years as a result. The question remains whether the corporate bond market will continue to grow deeper and broader as interest rates rise and investors bear the cost of more corporate defaults. There is significant scope for further growth in corporate bond markets outside the United States, but our analysis clearly points to bumps in the road ahead.

This position paper raises the concerns of private equity firms holding MiFID license regarding the new prudential regime proposed by the European Commission. It suggests that the new regime will lead to a significant increase in capital requirements for these investment firms, which is not proportionate to the risk they pose.