EVCA hits out at Treasury probe

The European Private Equity and Venture Capital Association has questioned the need for further regulation of UK private equity following the publication of the Treasury Select Committee's interim report. The pan-European trade body argues that any changes to the UK regime could have unintended consequences for Europe as a whole.

EVCA's contribution is notable as one of the few occasions where the pan-European body has waded into a purely national row. It highlights industry concerns that changes to the current system could either undermine the UK's competitiveness abroad, or else establish a precedent that will eventually be applied to other jurisdictions elsewhere in Europe.

The future of UK private equity is critical to the industry's success across Europe because the country accounts for such a large proportion of private equity activity in the region ? UK deals accounted for almost a third of European volumes in the second quarter of 2007, according to recent figures from Candover's Unquote Barometer. EVCA urged particular caution in any further scrutiny of the tax deductibility of interest and the treatment of carried interest, as recommended by the committee. This was important ?to avoid disproportionately increasing regulatory complexities or jeopardizing wider economic attractiveness and competitiveness,? it said. The body cited the recent tax changes in Denmark as an example, which it said would mitigate the loss of just 0.2 percent of the total tax take.

In other European countries, legal systems and regulatory structures were quite different, it added, making it difficult to apply any future recommendations across the continent. This could happen ?given the nature of today's international private equity marketplace,? it said.

The market is quite capable of self-regulation, according to EVCA. The recent tightening in the credit markets, which are showing ?more signs of risk aversion? than when the committee first held its hearings, demonstrated that political intervention was not required, it insisted.

EVCA also defended its own work in improving the industry's transparency in the last 15 years in the light of Sir David Walker's recent report (a study conducted by the British Private Equity and Venture Capital Association), pointing out that investors in the asset class now benefited from a number of principles-based guidelines like the Corporate Governance and Codes of Conduct standards.

Dodd to hold Senate hearing on tax bill
US Senate Banking Committee Chairman Christopher Dodd wants to hold hearings to examine implications of the proposed Grassley-Baucus Bill that would double the tax burden of publicly traded partnerships. If the bill is passed, listed private equity firms and hedge funds would be taxed as corporations. The Connecticut Democrat and presidential candidate has expressed reservation about the proposed bill. ?I am concerned about the potential adverse effects that these proposals would have on capital formation, on job creation and on institutional investors like pension funds and college endowments,? Dodd reportedly said. He has reportedly received $726,950 in presidential campaign contributions from private equity firms, of which nearly half was contributed by SAC Capital Advisors. The House Ways and Means Committee has also announced plans to hold a hearing on the bill. The Senate Finance Committee has already held two hearings on a separate bill that would change the raise the taxation of carried interest, currently 15 percent, to equal that of corporate earnings.

SEC proposes Form D update
The US Securities and Exchange Commission is seeking comment on a proposal to create an electronic system for issues of private securities to file a Form D. Under the Securities Act of 1933, those wishing to sell securities without registering with the SEC must file a Form D. Currently the form can only be filed in paper form, and is available only through specialist information services and in a records room at the SEC headquarters in Washington. The commission is also proposing to make the forms available on its web site. Most private equity funds submit a Form D. Comments should be submitted before September 7.

Swiss Exchange reprimands AIG Private Equity
The SWX Swiss Exchange has issued and published a reprimand against AIG Private Equity Ltd of Zug for violating the provisions of Article 72 of the Listing Rules and the Directive on Ad hoc publicity. The SWX reprimand relates to AIG Private Equity's failure to publish its 2005 annual report in accordance with the relevant regulations. Regulation says that if potentially price sensitive facts are published during trading hours, the corresponding notice must be submitted to the SWX at least ninety minutes before it is published. The SWX, however, found that the firm missed the deadline by a wide margin, therefore may have denied the SWX the opportunity to decide on any suspension of trading. Moreover, although the firm itself regarded its net asset value to be potentially price-relevant, it neglected to publish it properly on its website, as is laid down in the Directive on Ad hoc publicity.

Wall Street giants to compete with GSTrUE
Five of the largest investment banks on Wall Street have joined forces to launch a private trading platform, intended to rival a similar offering from Goldman Sachs that is reportedly being used by private equity firms to raise capital. Citi, Lehman Brothers, Merrill Lynch and Morgan Stanley have announced the establishment of Open Platform for Unregistered Securities, or OPUS-5, a trading platform for privately-owned stocks, which will have Bank of New York Mellon as an independent administrator. OPUS-5 is designed to create extra liquidity for institutional buyers and sellers looking to trade equities issued under rule 144a ? i.e. non-public shares. It will also provide issuers who are not looking to complete an initial public offering with a fast and efficient way to raise capital via a private placement. The platform is designed to rival GSTrUE, the Goldman Sachs Tradable Unregistered Equity system, which was launched earlier this year. According to press reports, buyout firm Apollo Management plans to raise capital on GSTrUE rather than following in the footsteps of rivals The Blackstone Group and Kohlberg Kravis Roberts by selling shares on the New York Stock Exchange. Oaktree Capital Management has also completed a capital raising on the Goldman platform.

SVB is early adopter AICPA standards
SVB Analytics, a valuation firm and a division of SVB Financial Group, has early adopted the American Institute of Certified Public Accountants' Statement on Standard for Valuation Services, four months ahead of the January 1, 2008, effective date. The standards relate to IRC section 409A and FAS 123R compliance. ?The standards are a welcome rulebook in light of the varied methodologies currently deployed to value common stock for private companies,? said Jim Anderson, president of Santa Clara, California-based SVB Analytics, in a statement.

Symphony goes public in London
Anil Thadani, chairman and founder of Singapore based Symphony International, has listed what is believed to be the first pan-Asia private equity fund on the London Stock Exchange. Symphony stock began trading on August 3 under the ticker SIHL. The firm raised $200 million in fresh capital from institutional investors, family offices and high net worth individuals across the Middle East, Europe and the UK; Symphony's management accounted for $10 million of new capital. The company's capitalization is now $340 million. Listing Symphony will allow the fund greater flexibility in holding investments for longer periods than afforded by a traditional private equity fund structure, Thadani told sister publication Privateequityonline. Symphony will continue to target the wellness sector, alongside hospitality, healthcare and retail. It invests in South and Southeast Asian companies, in transactions ranging from $20 million to $100 million. Thadani has been involved in Asian private equity since 1981, through Arral & Partners and subsequently Schroder Capital Partners.

Riverstone hires IR head
The Carlyle Group's energy affiliate Riverstone Holdings has hired ex-JPMorgan managing director Elizabeth Weymouth to lead investor relations. In a newly created position, Weymouth will head the firms' investor relations and communications activities, as well as lead the firm's fundraising activities. Riverstone's investor relations activities were previously shared by the firm's partners on a more informal basis. But with the firm's growth, it has begun to dedicate more resources to this area. ?We have long recognized the importance of maintaining a true partnership with our investors, particularly by providing them with timely, high-caliber information and high-level access,? co-founders David Leuschen and Pierre Lapeyre said in a statement. Weymouth was previously a managing director and the head of investment business in the US Northeast for JPMorgan Private Bank, where she oversaw $83 billion (€63 billion) in client assets. In her new role, Weymouth said she hoped to provide more ?proactive? coverage of the limited partners, passing along information on a timely basis and working to understand their needs.