In one of his first interviews since becoming chairman of the European Private Equity and Venture Capital Association (EVCA), TPG operating partner Vincenzo Morelli tells PE Manager the industry must improve its public image or suffer misaligned regulation.
“The image the industry has is inaccurate and very unfair. It is driven by stereotypes that do not conform to what the industry actually does,” said Morelli, who replaces outgoing chairman Karsten Langer.
“I strongly believe we are an essential source of risk capital for industry in Europe, and that once the politicians and regulators understand this in greater depth, we will not only get better regulation but we will be able to create an environment that is more conducive to investment.”
EU policymakers are currently crafting details to the Alternative Investment Fund Managers’ Directive, a pan-EU marketing regime for private fund managers. EVCA has in the past critisced the Directive as misunderstanding the nuances between private equity and other alternative asset investment models such as hedge funds.
EVCA's primary focus will be to address common negative industry stereotypes in a more intelligent and focused manner. The trade group is currently brainstorming ways how best to accomplish that objective, said Morelli, who added the use of empirical research highlighting the benefits of private equity will be the group's first step.
The move echoes efforts made by EVCA's US counterpart, the Private Equity Growth Capital Council, which recently launched its “Private equity at work” initiative. The initiative describes itself as “educating media, policy makers and the public about the private equity industry and its positive contributions to the American economy”.
Morelli said that it was the industry's fault for allowing this situation to occur, adding the industry took for granted that everybody would understand the private equity model.