EVCA concerned about Walker review

EVCA has responded forcefully to the end of Sir David Walker's consultation period into transparency and disclosure in UK private equity. EVCA has a number of concerns related to the report and believes the adoption of the measures in the UK would have a trickle-through effect on the rest of Europe.

One concern centres on Walker's differentiation between large private equity-owned companies and other privately owned companies. It believes that additional regulation for private equity-owned companies would create an uneven playing field for investors engaging in similar activity, such as hedge funds, banks and quoted companies. A further worry is that venture-backed companies will be dragged into the Walker net and face more onerous regulation affecting their performance and ability to raise further capital.

EVCA is particularly scathing about the fact that in his recommendations, Walker has assumed a level of opaqueness from private equity firms that is far removed from reality. The association points out that it regularly meets with industry participants to ensure professional standards are adhered to and has a number of guidelines on communication with LPs, marketing of funds and corporate governance that GPs observe. Walker's recommendations on some of these areas are already articulated by EVCA.

EVCA also raises doubts as to whether the attribution analysis foreseen by Walker can be truly objective and accurate because of the need to take several factors into account simultaneously. For example, the price of debt may have moved significantly from entry point to evaluation point, producing a result that may not be reflective of performance.

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