Nery Alaev looks into the new guidelines published by Invest Europe about transparency for investment professionals.

1. More transparency for Private Equity sector?
The private equity sector and regulations around it are investigated by Nery Alaev.
The trade body for Private Equity (PE) in Europe has published new standards for disclosure in
order to allay the fears of investors about issues such as fees and reporting.
I’ve decided to look into the news of this decision and why such a guideline of standards has been
created.
New directions
The 2015 Professional Standards Handbook, produced by Invest Europe, outlines updated
guidelines for fee disclosure – an issue that has
arisen increased pressure placed by investorson
PE managers.
On top of pressure from investors, the US
Securitiesand Exchange Commission (SEC) has
prioritised scrutiny of fees and expenses, which
has led to some high-profile organisations being
on the receiving end of fines for failure to properly
disclose information about charges.
The guidelines aren’t mandatory, instead they
recommend that best practices for fee disclosure are followed – it’s hoped that they are by Invest
Europe’s members, who are obligated to follow the group’s six-point code of conduct.
The guidelines include:
 A “detailed breakdown” of all fees paid directlyor indirectly by portfolio companies to the general
partner (GP) and related entities or individuals
 The disclosure of management fee terms
 The differentiation of costs borne by the fund and those paid by the GP
 How fees received from portfolio companies will be treated
 Carried interest arrangements
New responsibilities
Marta Jankovic, vice-chair of Invest Europe’s professional standards committee, said:
“Institutional investors demand high standards on issues such as responsible investment and fee
transparency

2. She added:
“The rapid growth of the industry over the past decade implies that an increasing number of people
are today employed by companies that are wholly owned or controlled by the industry”
Marta Jankovic’s comments imply an increased responsibility on firms to act in an ethical manner,
given that the industry is growing.
In conclusion, the new guidelines may not be an obligation but they’re definitely a step in the right
direction for Europe’s investment community.
Nery Alaev
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and
development of commercial and residential property in Germany and Austria.