Regulatory remedies

What is for sure, is that certain freedoms are going to be curtailed and that the concept of "private" in private equity is likely to be challenged, with new rules governing disclosure requirements. In the UK, the number of private equity firms affected would increase by 86 from the 16 that are currently covered by the voluntary Walker guidelines, if the proposals are accepted. The fact that this includes 9 VC firms is a particular sore point, especially considering recent political rhetoric encouraging the support of start-ups and development of new technologies.

In an environment where SMEs are already having a hard time finding financing to stay in business, some are suggesting that these types of measures may prove even more noxious to their health and does little to encourage private investments in the sector. The speed at which the legislation has been drawn up is also of concern, coming just two months after the commission's hearing on the asset class was held.

Politicking may be getting in the way - it is after all election year and public opinion is currently not too favourable to anything perceived to be related to the financial sector at any level. Indeed it is for this reason that the EVCA's proposed self-regulation, presented in its submission to the hearings, was roundly rejected.

The industry must now look forward and adapt to the changed environment in the hope that the prescribed cure does not keep the patient ill for longer. But regulation needn't be a bad thing; the secret is in striking a balance and aligning the interests of investors with the public interest. If only it were that easy!

Yours sincerely,

Francinia Protti-Alvarez

Editor, Southern Europe unquote"

Tel: +44 20 7004 7476

francinia.protti-alvarez@incisivemedia.com.

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