Richard Wilson, a senior executive at Apax Partners, was officially unveiled last week as the new chairman of the European Private Equity and Venture Capital Association (EVCA).
He takes over with draft reports expected imminently from both the European Parliament and European Council on the controversial Directive on Alternative Investment Fund Managers. With these reports in hand, Wilson will know what he’s up against as he prepares to defend the private equity industry in Europe from regulation it doesn’t want.
In a recent in-depth interview with sister publication Private Equity International*, Wilson appeared unruffled by the demands that will be placed upon him. “The thought of jumping in at the deep end was appealing to me. It’s an exciting time,” he said.
It’s just as well that he feels this way, since the Directive poses a threat to the industry on many levels. One is the restriction on marketing of so-called “third country” funds in the EU and marketing of funds by non-EU fund managers. “It’s related to investor protection but it’s caused a lot of concern,” Wilson said. “A lot of capital is raised from outside the EU and we don’t want to be seen as protectionist. We’d be shooting ourselves in the foot.”
Ominously, Wilson sees the marketing issue as a potential sticking point. At least it was visible, however. This is more than can be said for a recent amendment proposed by Sweden, the holder of the EU presidency, in relation to remuneration. The proposal would mean private equity being forced to adopt rules on bankers’ pay designed to curb the so-called bonus culture held by many to have played a key role in the financial crisis. Wilson notes (with a smile): “The draft was drawn up in April and then, in November, remuneration pops its head up.”
He is at something of a loss as to why the issue has cropped up at all: “It makes you scratch your head a bit because the principles behind carry-based incentives must surely be the model for everyone else to follow. You have alignment between investors, GPs and management teams and GPs get paid on long-term capital gain.”
In some respects Wilson is hopeful, believing “there has been progress on some of the provisions”. For example, he thinks that the proposed requirement for all alternative investment funds marketed in the EU to have an independent valuation agent – derided by some back office professionals as costly and unnecessary – will be withdrawn.
Overall, he thinks the situation regarding the Directive remains “highly fluid” and that there is still much work to be done. Few would dispute his own view that he has selected the deep end to dive into.
*The full-length Privately Speaking interview with Richard Wilson can be found in the December 2009 / January 2010 issue of Private Equity International.