UK - Recommendations in today's Walker Report on private equity have been welcomed by industry bodies, but described as a "diversion" by the union Unite.
The report, produced by Sir David Walker and aimed at increasing transparency, suggests portfolio companies publish their annual report and accounts on their website within six months of the year end; including the identity of the private equity funds that own the company, senior managers or advisers who have oversight of the funds, and details on the composition of their board.
Private equity firms have also been urged to publish details of their structure and investment approach, UK companies within their portfolio, leadership and arrangements to deal with conflicts of interest. These guidelines, along with others recommended in the report, are voluntary.
David Paterson, head of corporate governance at the National Association of Pension Funds, said pension funds had enjoyed good returns from private equity in recent years and could be expected to invest more in the sector in future.
He said: “Taken in the round, we believe that these proposals will support the success of the industry by encouraging an appropriate level of transparency, reporting to investors (limited partners) and improved performance reporting.
“Ultimately, these proposals will stand or fall on the strength of whether private equity firms comply with the guidelines.”
Daniel Godfrey, director general of the Association of Investment Companies, said: “This report is a sensible model for the responsible ownership of private companies.
“It is right that owners and managers of large private companies should recognise the legitimate interests of a broader range of stakeholders; from employees and unions, to customers, suppliers and communities.
“Owners and managers should be willing to engage openly with such stakeholders, but the limits of engagement must be set in such a way that it does not compromise the private company’s commercial objectives or prospects.”
However, Jack Dromey, deputy general secretary of Unite, said the report failed to address the key issues in the private equity debate.
He said: “Walker has predictably proved to be a diversion from the real issues of tax, transparency and the protection of workers’ rights.
“City self-regulation will never work. Legislation is now essential to lift the shroud of secrecy and to protect workers faced by private equity takeovers.”
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