The ACT’s view is that that private equity can enhance capital market efficiency and can widen the availability of capital, identify companies with significant growth potential and facilitate their transformation. We do not believe that there are material gaps in the current regulatory regime which would require substantial changes in the attitudes of policy makers.
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We have noted the recent moves by the BVCA and others to inquire into creating a code of conduct for private equity firms. We also noted – and responded to – the recent FSA discussion paper (dp06_06)regarding private equity and market risk. We would support moves to engage further with the private equity industry and its representatives through these discussions.
The Committee might however wish to consider the role of traditional ‘buy and hold’ instutional investors in the exercise of their fiduciary duites to their clients. It might appear that these institutions have nor been exercising their shareholder powers to encourage public company mangement to run their companies to best advantage in terms of the business strategies and the financing models. This seems to be evident in that private equity values companies at levels above those prevailing in the public markets.
