Private Capital Update - Rachel Reeves makes investment a central theme of party conference speech

PUBLIC AFFAIRS:

Rachel Reeves makes investment a central theme of party conference speech

In her first speech to the Labour Party conference as Chancellor of the Exchequer, Rachel Reeves stated the Government’s new industrial strategy will unlock investment, create jobs and deliver prosperity. This followed her clear statement that investment is the solution to the government’s ‘growth challenge’.

As part of the BVCA’s conference activities, Financial Secretary to the Treasury, Lord Livermore, discussed private capital’s contribution to economic growth and business productivity. At a roundtable attended by members, portfolio companies, stakeholders and members of the financial services ecosystem, Lord Livermore highlighted the industry’s role as a partner for growth.

Director of External Affairs, Karim Palant, discussed the Government’s pensions review with Pensions Minister, Emma Reynolds, at a Fringe event at the conference. This comes just a week after Reynolds spoke at the BVCA’s pensions summit where she stressed her first objective as Pensions Minister was to increase pension investment in UK productive assets. The BVCA also hosted a dinner with backbench MPs and attended the Business Day on the Monday with the Cabinet and other Ministers.

Ahead of what is expected to be a challenging Budget at the end of October, there were only a limited number of new policies announced during the Conference and nothing at all about tax. However, in a welcome contribution, Business Secretary, Jonathan Reynolds, set out his view that the private capital industry has an important role to play in addressing the government’s economic priorities.

Beginning this weekend, the BVCA team will be at the Conservative Party Conference, hosting a private dinner with Shadow Ministers on Sunday evening and engaging with leading party figures throughout Business Day on Monday.

To learn more about BVCA events and how to get involved, contact Juliette Gerstein, Senior Public Affairs Manager.

POLICY:

BVCA outlines how to boost pension investment into private capital

In its response to the Government's Pensions Investment Review call for evidence, the BVCA proposes solutions to policy and regulatory challenges that stand in the way of more pension investment into fast-growing UK businesses through private capital funds.

The BVCA has called for Government policy to ensure UK pension investment is focused on achieving the best long-term returns for savers and moves away from short-term cost considerations. It also calls for the Government to encourage consolidation and scale in UK pensions through an effective Value for Money framework.

Noting that the Pensions Investment Review and associated Pension Bill are encouraging steps in the right direction, the BVCA response states that the Government has an important role in setting out expectations for both the pension and private capital industries.

This response is informed by the work of the Pensions and Private Capital Expert Panel and the Investment Compact for Venture Capital & Growth Equity, a commitment by over 100 UK venture capital and growth equity firms to develop a long-term and constructive working relationship with UK pension investors.

For more information contact Tom Taylor, BVCA Head of Policy.

POLICY:

BVCA urges industry participants to respond to the Walker Guidelines consultation before 30 September deadline

BVCA Chief Executive, Michael Moore, described the Walker Guidelines on transparency and disclosure as “mission critical to the industry”, urging industry participants to respond to a consultation on options for updating the Guidelines before it closes on 30 September.

The Private Equity Reporting Group (PERG) and the BVCA published the consultation to refresh the Guidelines for transparency and disclosure in private equity to ensure relevant disclosures are in place as the industry continues to grow both in scale and importance to the UK economy. The consultation reviews the scope and requirements of the Guidelines, with the goal of introducing refreshed reporting requirements that continue to be comparable to those of the FTSE 250.

Read the full consultation document here. For more information or support with responding to the consultation, contact Ciaran Harris, Senior Policy Manager.

Comments can be submitted to [email protected].

POLICY:

BVCA welcomes FCA decision not to enforce cost disclosure requirements for investment trusts

The BVCA has welcomed the Government and FCA’s decision to waive Packaged Retail Investment and Insurance-based Products (PRIIPs) related cost disclosures for investment trusts.

The BVCA previously raised concerns that the PRIIPs regime required listed investment companies to disclose fees and other costs in a way that was inaccurate and potentially misleading for investors.

The statement also confirms that the FCA intends to consult on a replacement disclosure regime this autumn, with the intention to finalise the rules in H1 2025.

For more information, please contact Nick Chipperfield, Regulatory Policy Manager at the BVCA.

INDUSTRY:

Resilience and Opportunity highlighted at the 2024 Women’s Private Equity Summit

The Women’s Private Equity Summit held this week in Fairmont, Windsor Park, brought together investment managers and investors to discuss the latest investment trends across EMEA.

At the event, which is supported by the BVCA, allocators highlighted the current period as an exciting opportunity for deploying capital, noting that LPs now have more options and greater visibility into how GPs have performed through the recent downturn.

Sessions highlighted that despite a rise in transaction activity, the exit market remains subdued, with many LPs expressing concerns about a lack of cash velocity. While there is increased pressure on GPs to deploy capital, LPs warned that this can’t be at the expense of value creation.

The Summit also noted that fundraising remains challenging, with fundraising periods extended by 8-13 months, giving rise to a new trend of managers fundraising and deploying capital simultaneously.

To learn more about the event, contact Denise Typl, Senior Manager, Industry Development, Membership.

Media: weekly digest

Ahead of Rachel Reeves’ first budget on 30 October, carried interest continued to drive coverage this week. Following engagement from the BVCA, the FT’s Lex column urged pragmatism and cautioned against overly rigid approaches and stressed the need for balanced, practical solutions from the Government. The Telegraph also covered the subject, reporting comments from industry figures who may leave as a result of changes made to the regime.

The FT also presented a comprehensive taxonomy of sovereign wealth funds, offering insights into global trends that may inform Britain's plans to create its own new fund.

Bloomberg published a portrait piece on Keir Starmer’s new business adviser, Varun Chandra. Chandra, was previously Managing Partner at the London-based consultancy Hakluyt, which advises many of the world’s most valuable companies and private equity firms.

Finally, non-domiciled individuals in the UK are reassessing their positions, according to a separate FT article, who have reported a growing interest from private capital firms in European tax breaks in search of more competitive tax regimes.

To learn more about how the BVCA engages with the media, or about any of the above, contact [email protected].

News

• Financial Times: Private equity’s tax tussle needs pragmatism, not intellectual purity. View article here
• The Telegraph: Britain’s secretive millionaire-making industry at risk of a £500m tax raid. View article here
• Financial Times: A taxonomy of sovereign wealth funds. View article here
• Bloomberg: Keir Starmer’s Business Adviser Brings Connections, Complications From Past. View article here
• Financial Times: UK non-doms size up European tax breaks in hunt for fiscal advantage. View article here

Research: weekly digest

University spinouts on track to surpass 2023 equity investment levels

UK university spinouts received almost £1bn in equity investment in H1 2024, putting the annual total on track to surpass that of 2023, according to a new report from Beauhurst and Parkwalk.

Equity investment into University spinouts found that while the number of deals is likely to remain on par with recent years, the number of first-time spinout deals has declined in 2023. H1 2024 suggests this trend will persist.

Application software has attracted the largest number of spinout equity deals, followed by Pharmaceuticals and Biotechnology sectors.

Oxford, Cambridge, and Imperial College London universities had the highest number of equity deals secured by their spinouts in 2023. University of Sheffield secured a place in the top five for the first time this year.

The report also notes that US investors are the dominant participants in key deals alongside UK investors, followed by investors from Netherlands and Germany.

Private capital at a glance

£995m

was invested in UK University spinouts in H1 2024 across 205 deals.

£14.6bn

Total equity investment value into UK University spinouts between 2014 and 2023 reached.

Source: Equity Investment into University spinouts | Beauhurst Equity Investment into University spinouts | Beauhurst

Learn more on how private capital is making a difference on the BVCA website.

Spotlight

Pensions & Private Capital Expert Panel’s interim report

The Pensions & Private Capital Expert Panel’s interim report sets out a series of recommendations to assist industry, policymakers, regulators and other stakeholders to develop solutions to current barriers blocking pension funds from investing in private capital. The report outlines how public policy challenges can be navigated to enhance UK pensions savers retirement prospects and improve UK economic growth.

Covering a series of structural, technical and wider policy options, the interim report also includes a series of guides to build mutual understanding between both industries on areas such as the key features of the private capital industry, current market infrastructure and insights from overseas including Australia, the United States and the Netherlands.

Developed by the Expert Panel, with the support of the Technical Expert Group, the interim report was formally launched at the BVCA’s UK Pensions Summit on 11 September.