By Martin Banks - 26th November 2009
A draft parliamentary report on possible plans to clamp down on the banking industry has received a mixed reaction.
The report, by Jean-Paul Gauzes, argues that hedge funds with less than €100m in funds under management and private equity firms with less than €500m in assets under management should be forced to conform with the alternative investment fund managers directive (AIFM).
The directive is designed to impose rigorous reporting and disclosure requirements on funds.
Gauzes, parliament's rapporteur on the AIFM dossier, also proposed that companies subject to AIFM be compelled to hold a quarter of their annual expenses as capital reserves, far more than proposed in the original draft directive.
His eagerly-awaited draft report was debated at parliament's plenary in Strasbourg on Wednesday.
His plan to abolish caps on leverage, or geared borrowing, were welcomed by several hedge fund figures.
His proposals will dampen industry hopes that Sweden, which currently holds the EU presidency, will be successful in its efforts to dilute the AIFM.
But the British Private Equity and Venture Capital Association (BVCA) said that tighter disclosure requirements for venture capitalists "worsens a deeply defective directive".
The BVCA, which speaks for 450 UK-based private equity firms, urged the commission to reconsider the proposals, which look set to form the template for a revised directive.
Further reaction to the report came from Richard Wilson, chairman of the European Venture Capital Associaton (EVCA), who said, "Private equity and venture capital have over €100bn to invest in European companies.
"While we welcome Gauzes' assertions today that those companies should not be disadvantaged by this directive, the report places obligations on even the very smallest venture-backed businesses which could damage their ability to grow and innovate.
"Parliament's own impact assessment called this directive 'vague, sweeping, and inadequate'.
"Gauzes' report takes us some way along the road to improving it, but without addressing these inappropriate proposals the danger to investment in European business, innovation and pension returns remains."
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