Walker Guidelines Monitoring Group publishes fourth annual report

December 2011

The Guidelines Monitoring Group (GMG), the body established to review the private equity industry’s conformity with the Walker Guidelines, has published its fourth report on disclosure and transparency in private equity.

Forty-one private equity firms are covered by the Guidelines this year, an increase of six from the previous report, whilst there are a total of 78 portfolio companies, up from 55 in 2010. The report reviews the disclosure of a sample of 30 companies, 14 of which had not been previously eligible. Three of the companies reviewed in the report had previously been assessed as below average. Of these, two had had improved their reporting to meet the required standards. Doncasters, a Dubai International Capital portfolio company, failed to meet the necessary disclosure requirements.

Overall this year’s review found a higher level of compliance with the Guidelines than in previous years, a particularly encouraging result given the significant change in the thresholds to expand the number of private equity companies that are required to meet the Guidelines (see ‘Notes to Editors’ for more details). Those companies that had been previously assessed all reported at a level equivalent to, or in advance of, FTSE 350 companies. Whilst the new entrants all met the basic requirements of the Guidelines, the reporting of this group was not comparable to FTSE 350. The GMG will continue to work with these companies and provide advice and guidance to assist them in further improving their disclosure

Sir Michael Rake, the Chairman of the Guidelines Monitoring Group, said:

“Now in its fourth year, the latest GMG report sets a new benchmark of transparency for the private equity industry. Following a significant change in the thresholds for eligible companies, the population is now larger than ever, and the group has continued to raise the required standard of disclosure to achieve even greater levels of compliance with the guidelines. The report acknowledges there is still room for improvement, particularly with reference to new entrants meeting the thresholds. The GMG remains committed to raising the level of compliance with the Guidelines and increasing transparency in portfolio company disclosure.”

To read the report, please click here

 

Notes to Editors

In April 2010, following a consultation process with private equity firms, the Group announced that the criteria for defining a Portfolio Company should be expanded. The expanded definition applies to UK companies acquired by one or more private equity firms where the enterprise value at acquisition is greater than £350 million (reduced from £500 million) or where the market capitalisation together with the premium for acquisition of control was in excess of £210 million (reduced from £300 million) in a public to private transaction, and more than 50% of revenues were generated in the UK or UK employees totalled more than 1,000 full-time equivalents. These changes will be effective for accounting year ends of 31 December 2010 and onwards.