CEO of Invest Europe: “Private equity has the means to transform the recovery”

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The public, political and social impacts of private equity are often brushed off in interviews with the big and the good in the industry. But in Eric de Montgolfier’s first major interview since he took over the helm of Invest Europe two years ago, they are very present.

“As an industry, our role is to make policymakers understand that we can be very useful in achieving a common goal: to ensure that Europe as an economy and Europe as a society benefit from what we can bring to the table,” he said.

“I am now focusing on two things: proving beyond any doubt the benefits that private equity and venture capital can bring to the European economy and society; [and fostering] the best possible operating environment across Europe for our members and for our industry.

Invest Europe, the trade body for private equity, venture capital and infrastructure investment firms in the region, claims to be the largest private equity association in the world, with 620 members (including general partners and sponsors) in 37 European countries.

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De Montgolfier – a direct descendant of the Montgolfier brothers, who invented the hot air balloon in the 18th century – succeeded Britain’s Michael Collins as managing director of Invest Europe in December 2019, just months before the Covid-19 pandemic n ‘bursts. In progress.

The 56-year-old, from the Ardèche region in southeastern France (his surname acquired the aristocratic ‘de’ when his family business became the royal paper supplier to the court French), did not apply for the top job. at Invest Europe, but was approached by a headhunting firm.

“I have to say that when I got that call, I was surprised,” he recalls. “I had been on the board of medium-sized companies for Invest Europe for about a year and a half before, so I had a good understanding of how the association works, but I did not expect to receive this call.

De Montgolfier came to Invest Europe after a three-year stint as CEO of private equity firm Gimv France, the investment group listed on Euronext. Previously, he was co-founding managing partner and chief operating officer of lower mid-market firm Edmond de Rothschild Capital Partners, and prior to that he was instrumental in founding Astorg Partners.

De Montgolfier says that during his 30-year career in private equity, he has witnessed a constant transformation of European industry.

“At the beginning of my career, the industry was managed by financial groups investing their own funds. But it has become a third-party fund management industry,” he says. “This is a really significant change that completely changes the size, scope and obviously the assets and management of our industry. I started my career in Paris at a time when the industry was more interested in supporting long-term companies and entrepreneurs through our balance sheets than in raising and managing third-party funds invested in several companies over a long period.

Invest Europe has been based in Brussels since its creation in 1983, as lobbying European institutions on financial regulation is one of the association’s main focuses.

“It makes sense to have our offices close to the EU institutions, where our public affairs team spends a lot of time advocating for the industry, convincing stakeholders, including policy makers, of the benefits of the industry and what we can contribute to the European economy and society”.

Over the past year, Invest Europe has been pushing for an EU review of the decade-old Alternative Investment Fund Managers Directive. De Montgolfier admits that the AIFMD is “not perfect”, but adds that “we don’t need to change something that isn’t broken”. The association’s lobbying has not been in vain, he says, as the European Commission only proposed minor changes to the legislation in November.

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“These have taken most of our concerns and suggestions into account and we are happy to have achieved this early victory,” he said. “We have yet to see the final result, but we are quite optimistic.”

Invest Europe has also been monitoring EU revisions to the controversial Solvency II regulations for insurers and the capital requirements regulation for banks, which affect how they invest in private equity.

“In either case, we could do a lot better,” he says. “We advocate that the review of the EU prudential framework for banks and insurers must ensure that capital requirements do not discourage long-term capital investment, because if you reduce the capital needed to invest in private equity, you limit the ability of individual investors to invest in the asset class, and that impacts retirees and savers, who are helped by the returns generated by private equity.

De Montgolfier says that as Europe emerges from the economic downturn created by the pandemic, policymakers need to “put the right framework in place so that private equity and venture capital can play their part in helping kick-start the economy.” ‘European economy’.

With more than €700 billion in assets under management in Europe, the private equity industry has the wherewithal to help provide the necessary economic boost, he says.

“Our industry has the financial means to transform the European economy to participate in this recovery,” he says. “We are therefore trying to ensure that policymakers are aware that we will play a vital role in recovery efforts, while at the same time helping the transition to the European sustainable finance and digital agendas.

“The industry has an unrivaled skill set to support innovation and new technologies for venture capital, fund long-term transitions, provide change management and strategic direction, so we as as industry, are uniquely positioned to play a meaningful and positive role in achieving climate change neutral goals.

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Asked to respond to the widely held view among critics of private equity that the industry puts profits above people through asset stripping and a short-term approach to investing, de Montgolfier says that the industry must use hard facts to combat public perceptions, which it says are gleaned from anecdotal evidence.

“We have data showing that our contribution to the European economy is enormous. Private equity firms employ 10.2 million people, representing 4.3% of the entire European workforce, which is huge for a single industry. He also claims that in Europe, the industry created 500,000 jobs between 2017 and 2019 and invested a total of €88 billion in more than 8,000 companies in 2020.

“Our industry has grown strongly over the last decade, so it’s only fair that we come under more scrutiny from policy makers and the media. I have nothing against that, but you can always find outliers and outstanding performers in any sector, in any industry, in any situation. I strongly believe in the benefits of the industry and my job is to combat anecdotal evidence with facts and data to convince the public that it’s not as it’s portrayed in some media. One of the main missions of private equity is to support growth, because if you grow businesses, you create jobs.”

The father-of-two, whose wife is half-British, half-French, says that from a personal perspective he regrets Brexit.

“Our role now is to work closely with our colleagues at the BVCA (the British PE and VC Association) to try to ensure that there is as little divergence as possible between the EU and the UK in our industry, because we truly believe that we are a global industry,” he says. “We need capital inflows and outflows to move seamlessly from country to country and continent to continent. the other.”

Asked about his expectations for the coming years, de Mongolfier said the industry will continue to thrive and grow, as it has for the past four decades.

“The long-term trend is for continued growth and the pandemic has not stopped that trend. He stopped it for, say, three to four months before starting again.

“There will no doubt be occasional misfires. There will be the occasional crisis that may affect one year or another over the next few years. But overall I think our industry has really shown its value and the discussions we have with policy makers show that this is being increasingly recognized.

This article was published by Private Equity News.

To contact the author of this story with comments or news, email Mark Latham

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