Sir David Walker to Chair Private Equity Working Group on Disclosure
London, March 1, 2007: The BVCA – The British Private Equity and Venture Capital Association – today announced that it will form a working group under the Chairmanship of Sir David Walker to examine ways in which levels of disclosure in companies backed by the UK private equity industry could be improved.
In order to achieve this the BVCA will establish a high level industry working group to produce a voluntary code addressing the transparency of the industry and levels of disclosure. The working group will recognise the very different types of investment and issues relating to different segments of the industry from small start-up financing to large buyouts. It will also take account of the size of the portfolio companies concerned.
This has received support from across the industry.
Sir David Walker, Senior Advisor at Morgan Stanley International (former Chairman of Morgan Stanley International, former Executive Director Bank of England, and former Chairman of Securities and Investments Board) will chair an independent industry working group tasked with drawing up a voluntary code addressing the levels of disclosure in the industry and how it should communicate with a wide range of stakeholders.
The working group will consult widely. The process will invite representations from within the private equity industry, with interested parties and among other financial institutions, pension funds and the investment community and more broadly with portfolio companies, trade unions and employer representatives.
Rod Selkirk, Chairman of the BVCA, said:
“This initiative reflects the coming of age of the private equity industry as a mainstream asset class in the UK. We recognise that the industry’s success has led to growing and legitimate interest in its activities.”
“We plan to build on our existing high-standards of transparency and openness to our investors by increasing the level of disclosure to a wider group of stakeholders.”
“This working group will be fully attentive to the need to avoid any additional reporting burdens on the smaller companies backed by private equity and venture capital.”
Sir David Walker, commenting on his appointment, said:
“I will be seeking input from a broad spectrum of the industry and from all interested stakeholders in this important debate. We expect to complete the process by the autumn.”
This initiative has support from across the industry including many of the largest Private Equity firms operating in the UK.
Notes for Editors:
i. It is envisaged the working party will produce its report by the autumn.
ii. It will address the following:
Appropriate levels of narrative and financial reporting.
Whether and to what extent the case is made for increasing the level of reporting for PE-backed companies.
Timing of any increased reporting for PE-backed companies.
Clarity and consistency of practice with regard to valuation methodology, its verification and disclosure to investors of returns and fees.
The working party will recognise the very different types of investment undertaken by the industry from small start up financing to large buyouts.
The Financial Services Authority which regulates the industry has recently concluded a thorough and comprehensive review of the industry and in its paper, published in November 2006, stated that: “We believe that the private equity market is an increasingly important component of a dynamic and efficient capital market. Private equity offers a compelling business model with significant potential to enhance the efficiency of companies both in terms of their operation and their financial structure.”