Private equity’s public impact: Q&A with EVCA chair George Anson

You are the first LP to take up chairmanship of EVCA. Does this reflect a shift in the industry?

I think it really underlines the fact that the private equity community in Europe is about much more than just the fund managers. And there is no better way of illustrating that than through my chairmanship of the EVCA.

The reality of private equity is that there is a food chain that operates successfully and impacts many people's lives. Fund managers make successful investments in companies with capital provided by pension funds, insurance companies and other institutional investors around the world. And those returns are there to meet the liabilities of institutions. That's the food chain.

The newly-appointed EVCA chairman discusses PE's public impact

In the case of pension funds, those liabilities are the obligations they have to fund our pensions when we grow old and retire. Pension funds have the covenant of the employer – be that the government, the taxpayer or the corporation – and they depend upon the asset allocations they make and the returns that they expect those asset classes to deliver. And if they don't deliver them and the pension fund fails to live up to its liabilities, then it has to return to its sponsor company and ask for more capital. And where does that money come from?

Well in some cases, it could be jobs. Companies may have to make hard decisions and close a division because of the needs of the pension fund. So I think it is really vital to recognise that private equity has historically outperformed public markets and that has meant institutions continue to invest 2-5% of their assets in private equity.

Private equity is about much more than just fund managers making money. It is really important that institutions continue to make the returns that enable them to meet the liabilities. So my appointment illustrates the wide reach of the industry.

How do you view current levels of engagement between the private equity industry and policy makers?

I think the EVCA is recognised as being the leading voice of the private equity industry in Europe. That hasn't happened over night; it has taken a lot of hard work. As a consequence of that and some of the more recent successes, I think the advocacy group and the regulators that we speak to in Brussels listen more to the EVCA because we make sure that everything that is communicated is backed up with good hard facts and research.

It's not a question of "trust us, it'll be ok". For instance, the Frontier Economics report we did recently underlines the fact that we are trying to put as many facts and figures in front of decision-makers so that they are as well armed as they can be and can hopefully make the right decisions.

This is all part of the educational process. People in government move around; if I use the analogy of the UK government, you have somebody who is the Minister for Health, who suddenly becomes the Minister of Defence. They are often on a steep learning curve and I think it is no different in Brussels. Our job is to inform them so that they can understand the asset class and make appropriate decisions.

How important is interaction between the EVCA and national private equity associations?

The three national associations that are involved in the public affairs executive are the BVCA, Afic in France and the BVK alongside whichever country has the current six-month presidency of the EU. So there is a bit of a revolving door there too, but I think that is our star chamber when it comes to thinking about our advocacy initiatives and how we want to go about approaching new rules and regulation proposals. I learn a lot in these meetings; these are incredibly talented people whose job it is to know how these regulations will affect our industry.

What is your number one priority for the upcoming year?

I think it returns to the question of driving home the fact that private equity affects a very broad range of people. It touches everybody's lives; you only have to walk down the high street to see businesses that are owned by private equity. And I want to bring those truths home that the investment strategy here is about sustaining businesses. We heard in a speech at the EVCA Symposium that the average holding period is about five years – this is long-term patient capital. And the returns that are generated from these investments are for the greater good. There is no simpler message than that.

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