Britannia Radio

The European parliament  pushes ever more draconian regulations 
through under the pretence of consumer protection,  but in reality to 
further their generalised goal of a "social Europe" which means a 
'corporate state' much favoured and long-practised in Germany and 
held up as a model by the Nazis.   It is the death of an 
entrepreneural economy.

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FINANCIAL TIMES 20.4.09
Private equity leaders condemn draft EU law
By Martin Arnold, Private Equity Correspondent

The private equity industry risks being hamstrung by draft European 
legislation to be published next week, according to buy-out industry 
leaders, who warn it will be a costly burden for small companies.

"We had expected this to take in our biggest members and their 
biggest enterprises," said Simon Walker, chief executive of the 
British Private Equity and Venture Capital Association (BVCA). "But 
what does horrify us is the extent of the burdens imposed on the mid-
market and even on some venture capital firms."

Speaking to the Financial Times last week, he accused Poul Nyrup 
Rasmussen, the former Danish prime minister and MEP who has been at 
the forefront of the push for more oversight, of leading "an economic 
crusade" against private equity.

Under the draft European Union law, any private equity group managing 
funds equal to more than ?250m (£220m) in total would be forced to 
disclose more information about its structure, strategy, and investors.
Mr Walker said this would affect 86 more UK private equity groups, in 
addition to the 16 bigger firms already publishing more information 
under the voluntary transparency code for the industry published last 
year by Sir David Walker, the City grandee.

Of these, nine would be venture capital groups that provide seed 
financing for technology start-ups, an area that European politicians 
have been battling to encourage for many years.

The draft law would also force any company owned by an EU private 
equity group that had more than ?50m of annual turnover, or an 
"annual balance sheet total" of more than ?43m, to publish its 
finances, strategy and outlook every year.

Mr Walker said this was expected to affect 500 to 600 UK companies, 
which would each face the extra £25,000 to £30,000 cost of complying 
with the new law, based on a "quick estimate by a big four accountant".

In a bizarre twist, Mr Walker said the law would also affect 
companies outside the EU if they were bought by a private equity 
group based within the 27-member state bloc. So a Chinese company 
would have to comply, if it was 30 per cent-owned by an EU-based 
private equity group, such as Permira or Apax Partners.

Perversely, if a British company was bought by a private equity group 
based outside the EU, it would be free of the planned legal 
requirements, which are aimed at all alternative investment fund 
managers.
"This will provide a profound disincentive to be owned by a private 
equity fund," said Mr Walker, forecasting that it would push up 
private equity fees for investors. "Will it be passed on through 
increased costs for investors? I think so."

His comments came as the BVCA said private equity and venture capital 
investment in Britain fell from £31.6bn in 2007 to £19.5bn last year.