Further to our E-Bulletin article of February 2009 on the Guidelines Monitoring Group's report on compliance with the Walker Guidelines (the Guidelines), the GMG has published an update report. (The Guidelines were published in December 2007 and provide guidance for enhancing disclosure and transparency by private equity firms.) The update report sets out the GMG's review of conformity with the Guidelines in respect of (i) disclosures by private equity firms and (ii) the availability of reports and accounts and mid-year updates by portfolio companies. The update report also sets out a suggested change to the Guidelines.


The GMG explains that, having carried out another review of disclosures made by private equity firms following its January 2009 report, all private equity firms covered by the Guidelines are now fully conforming with the disclosure requirements of the Guidelines. The GMG is due to issue a full annual report at the end of 2009 which will cover disclosure compliance by portfolio companies.

In respect of portfolio companies, most of those companies that are within the Guidelines, either on a required or a voluntary basis, have made available on their websites audited reports and accounts and summary mid-year updates. Those companies which have not yet complied have, at least in principle, committed to do so with effect from December 2008.

Proposed change to the Guidelines

The GMG has recommended that the definition of "portfolio company" be extended. Currently, for a portfolio company to fall within the Guidelines, it requires to have been either (i) acquired by one or more private equity firms in a public to private transaction where the market capitalisation together with the premium for acquisition of control was in excess of £300 million or (ii) acquired by one or more private equity firms in a secondary or other non-market transaction where the enterprise value at the time of the transaction was in excess of £500 million. In addition, in either case the portfolio company requires to (a) have generated more than 50% of its revenues in the UK and (b) have more than 1,000 full-time equivalent UK employees. The GMG has suggested that the British Venture Capital Association amend this definition with immediate effect so that, rather than having to meet both the 50% revenues having been generated in the UK and UK employees totalling in excess of 1,000 full-time equivalent requirements, meeting either of those tests is sufficient.

The GMG estimates that this amendment would mean that a further 23 portfolio companies will be brought within the Guidelines' disclosure regime (although approximately 14 of those 23 portfolio companies already comply on a voluntary basis).

The GMG is also currently consulting with the private equity industry on whether the £500 million threshold used in the current definition of portfolio company should be lowered. It is expected that any change to this threshold would become effective from 2010 once the draft EU Directive on Alternative Investment Fund Managers has been published and considered.

View the GMG update report (2 page pdf).