Knowing the policy risks
26th Jul 2010
"Today's FT covers a new report that questions private equity's abilities at generating return on investment. The sector has quickly criticised the research and defended private equity's economic contribution, no doubt keen to avoid a repeat of the fuss that engulfed the industry several years back.
We feel our Policy Risk Analysis (or PRA) can help here. Private equity groups invest in many companies who provide (often specialist) resources to the public services. This ranges from children's services and skills training to welfare reform and the NHS, to name but a few areas. But are investors sure they always know how policy and regulation will impact on the value and reputation of the organisation they are investing in?
It's fair to say that in straightened times investors will be looking for reassurance that their capital is being invested well. And private equity chiefs will want to scrutinise deals ever more closely before committing funds. Thorough due diligence is key.
When it involves investing in providers to public services, or heavily regulated sectors, PRA gives expert insights into what decisions, legislation and regulation lie ahead and what that means for ROI. Then partners will be in full view of the facts and risks before deciding whether to say 'go or no' on an investment."