Private Equity Industry To Increase Disclosure

by Stewart Douglas

Story link: Private Equity Industry To Increase Disclosure

The domestic private equity business in the UK has today been called upon to increase transparency in the level of deals it engages in amidst ongoing allegations of underhand tactics and asset stripping throughout the sector.

The industry has attracted attention from the government in recent months and related unions and associations, following a review by an independent commission suggested the industry should adopt a more open approach to the business structures, despite ensuring that remuneration details can still be kept under wraps if desired.

The review commissioned on behalf of the British Private Equity and Venture Capital Association was conducted by former banking executive Sir David Walker, and uncovered an ongoing issue with a lack of clarity within the industry.  As a result the review will see the establishment of an independent review panel to regulate the disclosure situation within the private equity industry.

Union bosses have today branded the policy of enabling self regulation within the industry as ‘mad’, particularly in light of the situation with Northern Rock which they describe as being partially down to the private equity industry.  It is thought that whilst today’s move will bring the industry into line with other similar industries, it will still fall subject to criticism from those that feel it necessary to introduce more regulation into the market.

Speaking today on the move the CBI have said that the proposals would help improve public perception of the industry, which is often shrowded in mystery and viewed with suspicion.  However it did also add that it found much of the criticisms direct towards the industry to be lacking in real substance.

However it has been argued conversely that heightening regulation may have a tangible macro-economic impact for the UK economy, by hindering the progress of private equity firms.