Commission launches public consultation on private equity exits
The European Commission is seeking feedback on obstacles that private equity investors face when exiting their investments and possible ways to address these obstacles.
The input will support the Commission’s work under the Savings and Investments Union (SIU), in particular efforts to improve the access to finance for EU startups and scaleups.
Private financing, including from private equity or venture capital funds, plays an important role in supporting young and innovative companies, who often find it difficult to access traditional bank financing.
Ensuring that exit opportunities are available, such as through sales of private equity stakes or through initial public offerings (IPOs), is crucial for the availability of capital, as investors depend on realised returns to fund future investments.
Despite past policy efforts, private equity investors in the EU continue to face challenges when seeking to exit their investments. For example, they may not be able to wait for an IPO to realise capital gains, or the lack of a credible valuation of private assets may hinder a transaction. Those difficulties reduce market activity, limiting the availability of growth capital and possibly prompting promising young companies to move outside the EU in search of funding.
The Commission is seeking stakeholder views on possible barriers for exiting private equity investments in the EU, the merits and possible design features of a platform for secondary trading of private company shares, and the potential of an extended use of such a platform for raising new equity capital. The consultation is open until 27 April and targets a broad range of stakeholders, including companies in search of early-stage capital and private equity investors. The feedback will inform the Commission’s decision on whether further action is merited in this area.
