BVCA appeals to Securities and Exchange Commission

The British Venture Capital and Private Equity Association (BVCA) has sent a letter to the US Securities and Exchange Commission arguing the proposed ban on US public pension funds from using placement agents will severely hamper fund raising efforts for all but the largest of UK private equity firms.

The proposal is a reaction against the pay-to-play scandal in the US where numerous arrests have been made of politically connected middleman paid by investment firms for the sole purpose of getting business from public pension funds.

It’s an issue for the BVCA because 50% (£10.3bn) of all capital raised by BVCA members last year came from North American institutions, with £3.8bn from US pension funds, much of it via placement agents.

“While we are fully supportive of measures which prohibit these ‘pay-to-play’ arrangements, an outright ban on the use of all placement agents by public pension funds is unwarranted and the unintended consequences of such a ban would be extremely damaging for private equity and venture capital firms in the UK, Europe and indeed the US,” says BVCA CEO Simon Walker in the letter, which is attached to this story.