When it comes to providing more diversified funding opportunities for companies and reduce their over-reliance on banks and public funds, it is clear that some operators and notably in the PE industry are outperforming in acting as the bridge between investors and businesses in need for finance. In 2020 alone, PE and VC funds invested over €88bn in the European economy and supported almost 7,000 SMEs. Investee companies backed by PE and VC funds represent more than 10 million jobs in the EU, with a job creation rate 5 to 6 times the European average. Moreover, PE is consistently and often significantly outperforming listed equities.
That said, for the private equity industry to continue allocating private capital to EU companies in need for financing, the issue is not just how we as an industry are regulated ourselves, but how the entire value-chain functions. For this reason, not only files such as AIMFD are crucial, but also those that affect investors such as Solvency II, CRR, MiFID or ELTIF. These key rules, currently being negotiated under the French Presidency of the EU, need to be well-calibrated to allow the private equity asset class to continue delivering towards the completion of the CMU and the recovery.
Listen in to hear more on this from Invest Europe CEO, Eric de Montgolfier, at the ECMI 2021 Annual Conference.