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The British
Private Equity and Venture Capital Association (BVCA) has attacked
Government plans to give more power to the Pensions Regulator (TPR)
as it risks deterring takeovers of UK companies and could reduce
private equity investment.
In a letter to Minister of State for Pensions and Reform, Mike O’Brien,
dated 19 June 2008, BVCA chief executive Simon Walker highlighted
his concerns that the proposed changes outlined in the consultation
would have “a negative impact on normal corporate transactions,
including leveraged takeovers”. He said the BVCA is concerned
that the changes will “lead to increased clearance applications,
at a time when the Regulator is already inadequately resourced to
process applications efficiently”, and that investors who
have not decided to invest in the UK will lose out. “Sponsors
of defined benefit schemes will not receive the additional investment
BVCA members bring, nor gain from the valuable management skills
they add,” Walker said in the letter.
One of the main issues for the BVCA is that it is questionable whether
these changes are necessary at all. Walker said that in the event
of a non-insured buy-out provider misusing scheme funds, TPR has
a number of powers already. “We have therefore seen no evidence
that the existing powers are not sufficient to protect both scheme
members and the PPF from current or future threats. No further powers
are necessary.”
The firm is also concerned that, by possibly acting as a deterrent
to new investment, the consequence may be that the risk to members
and subsequent calls on the Pension Protection Fund (PPF) will increase.
According to BVCA spokesman, Richard Lomas, the firm is already
aware of three separate deals which were immediately stopped as
a result of the initial announcement. “We think this is going
to stop investment happening,” he said. Lomas said the BVCA
is also concerned because “as it stands, there won’t
be any Parliamentary scrutiny” of the proposed changes and
their potential outcomes.
Walker called on O’Brien to open the new legislation to the
same parliamentary scrutiny as that which is now the subject of
amendment, as he believes the consultation period “leaves
little time to digest and reflect on a highly complex set of changes;
and Parliament itself will have insufficient time to debate either
the rationale for the moves, their implementation, or any amendment.”
The firm is also calling for a minimum of the publication of a full
Regulatory Impact Assessment to allow the industry to understand
what the Government believes will be the ramifications of the changes.
A further letter from Walker published in the Financial Times on
9 July, signed by other concerned representatives, outlining the
“fears for investment in businesses with defined benefit schemes”.
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Pensions Age July 2008
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