Regulation threatens present and future of industry

"The reality of tax havens is that they are there so pension funds don't have to pay tax twice," said outgoing chairman of the EVCA Vincenzo Morelli. "So create something tax neutral; there is some progress to be made there. If we had a good vehicle then that would facilitate investment."

In a similar vein, delegates called for the rise of tailor-made regulation, citing the danger of the one-size-fits-all approach. The role of industry associations as an intermediary between decision-makers and the private equity community was widely lauded as critical in such a context.

"It is fair to say that the difference between private equity and hedge funds was not so clear in the heads of governments around the table [at the time of drafting regulation including AIFMD]," conceded Yves Leterme, deputy secretary general of the Organisation for Economic Co-operation and Development and former Prime Minister of Belgium. "I think the EVCA has been successful in speaking to national authorities to explain the difference between alternative asset classes. And there is also now consciousness that whatever the form, we need money to fuel the economy," he added.

Stunting growth
Morelli also called for the prevention of "misguided regulation that artificially restrains long-term capital," echoed in a later plea made by Tim Hames, director general of the BVCA, to Steven Maijoor, chairman of European Securities and Markets Authorities (ESMA): "My biggest concern is not that regulation will strangle existing firms, but that it will serve as a disincentive for new funds to begin. I would urge you to add to the list of questions that you ask of yourself and your colleagues: 'is this decision going to make it easier or harder for professionals to launch a new fund'."

However, Morelli admitted: "There has to be a balance, ensuring there are rules that prevent pension funds from excessive risk taking, but ultimately you have to let the market decide. You can't nanny every pension fund because that will distort the way they invest. The commission should change tax completely, going from 'let's restrain this' to 'how do we spur the growth of occupational pension funds?' That is where the long-term capital that creates the jobs of the future will come from."

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• Topics
• Regulation
• Turkey
• EVCA