Initiative for more transparency of the German private equity industry

The private equity firms, which are members of the Large Buyout Group within the German Private Equity and Venture Capital Association (BVK), have decided to adopt a unified approach of communicating with the public in Germany.

This is a voluntary commitment on their part and to this end, the thirteen members have adopted the 'Transparency guidelines of the BVK Large Buyout Group'.

In future, the business activities of these companies are to be more widely exposed for public scrutiny. This is so that the activities of private equity companies can inspire a greater trust amongst the general public as well as from suppliers, customers and employees of the portfolio companies.The transparency guidelines contain recommendations aimed at standardising public disclosure rules for the private equity firms of the BVK Large Buyout Group and their portfolio companies, provided certain criteria are met. These criteria are as follows: the target company must be a company under German law, it must have an enterprise value in excess of Euro 750 million, it must generate more than 30% of its turnover in Germany, and must employ a (full-time) workforce of more than 1,000 in Germany. Provided three of these four conditions are met, information about the company shall be disclosed in accordance with the transparency guidelines.

The private equity firms shall reveal the names of the portfolio companies in which they have an interest, how the boards of these companies are structured, the involvement of private equity firms on these boards, their turnover, and the size of their workforce.

Since the transparency guidelines of the BVK Large Buyout Group are merely recommendations rather than a legally binding code of conduct, private equity companies are permitted to deviate from the guidelines; Should  this be case, however, they must then undertake to issue an annual public statement to this effect in accordance with these transparency guidelines (the principle of 'comply or explain').

In addition to the public disclosure rules of the private equity firms and their portfolio companies, the transparency guidelines also include procedures governing the way in which private equity companies communicate with their investors, and how they communicate with the employees of the portfolio companies.

The individual points covered by the guidelines were fleshed out over several months of focused discussion with the relevant member firms and their legal and communications consultants. These discussions were led and moderated by the Large Buyout Group.

During the drafting process the guidelines were also discussed in detail and followed up by the executive board of the BVK. The board strongly welcomes and supports this initiative by the group of major buyout houses within the BVK, which aims to increase transparency through a voluntary commitment by the companies involved.

Twelve private equity companies are currently members of the BVK Large Buyout Group, namely Allianz Capital Partners, Advent International, Apax Partners, Bain Capital, BC Partners, The Blackstone Group, Carlyle Group, Cinven, CVC Capital Partners, KKR, Permira and TPG Capital.

Press contact:
Dörte Höppner, MD
Bundesverband Deutscher Kapitalbeteiligungsgesellschaften e.V. (BVK)
Tel. +49-30-30 69 82 - 22, fax +49-30-30 69 82 - 20
Mobile +49-172-308 99 11, e-mail: hoeppner@bvkap.de