Walker calls for stakeholder transparency

Sir David Walker, the former chairman of Morgan Stanley International, yesterday called for greater transparency to their stakeholders from private equity-owned companies.

Walker, who was recently charged by the BVCA to chair a committee looking at issues of disclosure and transparency in the private equity industry, yesterday faced questions from the Treasury Select Committee.

He told the committee that a full consultative report based on the findings of the BVCA committee would be published on July 17 and was aimed exclusively at the larger buyout end, not venture capital or development capital.

“The industry has a significant influence in our economy and it has grown enormously in the last three years. But its attentiveness to stakeholders, which I think is legitimate in private equity, has not been matched by growth and we need to address that issue,” he argued.

According to Walker, the report will focus on a number of key areas including a voluntary code of reporting by portfolio companies and stronger generic communications by private equity firms themselves.

“Also very importantly, given the partiality of the data availability, a more effective industry-wide collection of data and the promotion of good quality evidence based research,” he said.

Chairman of the select committee John McFall asked Walker at whom the report was targeted.

“In my mind, the report is available to anyone interested in the economy and the role of private equity in it,” Walker replied. “I expect it to be of particular interest to non-owner stakeholders such as employees, suppliers and customers.”

When asked if public scrutiny would be enough to make private equity firms conform to the voluntary code, Walker answered: “I am reluctant to put in place an enforcement capability to monitor the compliance to what I am proposing.

“The full force of public opinion will be very strong in this environment. I don’t think the focus on private equity will wither away, interest on the part of the unions and MPs and a better-informed media will continue to be intense. That scrutiny will be intense for anyone in this space.”

Sandrine Bradley