At the start of his Chairmanship, Simon Havers, looks at the issues facing the industry in the next twelve months
My 12 months as British Private Equity and Venture Capital Association chairman, starting Tuesday 31st March, are certain to coincide with continued recession. The crucial question, not just for the private equity industry but the country as a whole, is whether they will also coincide with the start of a real recovery. The twin themes of recession and recovery along with a third 'r', namely regulation, will dominate the BVCA agenda in the coming months. They will ensure that I enjoy a challenging tenure.
I am very fortunate, however, that Jeremy Hand has done so much hard work ahead of me. In his two years as vice chairman and then chairman of the BVCA, Jeremy has overseen the wholesale transformation of the organisation. It is now in a far better condition to meet the tests it will face than it was two years ago. I am fortunate to be able to count on Jeremy's counsel during my time as chairman.
Dealing with the recession and igniting recovery are critical for the private equity sector and Britain at large. Introspection will not help anyone. There has been far too much energy spent arguing about who is to blame for the recession and too little on how the economy will be restructured. This "blame game" is not only pointless, it is counterproductive. The blunt truth is that none of us thought the economy would be where it is today a year ago, let alone two years ago. The disturbing further truth is that none of us can predict with any confidence where the economy will be in a year's time, let alone 2011. The crucial task is to pull ourselves together as a country and concentrate on limiting the damage that the recession will inflict and then work to recast the British economy for the future. Private equity prides itself on an understanding of the importance of restructuring. We should be part of a national debate about the economy as well as interested in our own immediate concerns.
Private equity will need to evolve if it is to be the force that it should be. As we all appreciate, the days of the multibillion-pound deal seemingly every other week, financed by easily available credit, are over. Who knows when or whether they will return. The model now needs to adapt itself to the demands of operational improvement while searching for the intriguing deals that the end of the recession should offer. Private equity is not part of the problem but a source of the solution. It will certainly be involved in rescuing ailing and failing companies as well as sheltering present portfolio companies from the storm. The BVCA should be prepared to mobilise all the resources that it can to that endeavour.
As part of this enterprise, we need to highlight the continuing advantages of this asset class to past, present and potential investors. We must make the case to limited partners that private equity is indeed, as we have long asserted, about the long-term and that in the longer term commercial success will come. We also need, in conjunction with other business organisations, to engage with the banks to ensure they treat their portfolio companies properly and are prepared to come in alongside equity providers in new investments.
The BVCA must maintain its momentum in two key areas. The first is engagement with politicians and the public at home and in Europe. The process of transparency associated with the Guidelines Monitoring Group under Sir Michael Rake and his colleagues has made substantial progress in the past year and this must be entrenched further.
Demonstrating our commitment to meaningful independent regulation should allow us to convince European institutions that intrusive regulation of the kind that some have advocated is unnecessary and would only serve to threaten recovery and employment. In order for this argument to have the impact that it should, secondly, we need to improve our research capacities further, especially returns management and attribution analysis, so that our public claims are reinforced by credible and convincing data.
This will not be a comfortable year for the industry in many respects. It should, nevertheless, also be regarded as an opportunity to contribute to economic recovery. I am determined that the BVCA will make the most of the moment.
Simon Havers
BVCA Chairman
