The UK’s decision to leave the European Union is “unwelcome news”, said Michael Collins, deputy chief executive and public affairs director of industry body Invest Europe.
Speaking to sister publication Private Equity International following the announcement of the referendum result, in which 52 percent of Britons voted to leave the European Union, Collins said the focus must now shift to dealing with the implications of the vote and “working constructively” to ensure the UK’s future relationship with the Union “doesn’t impact too negatively on the ability of GPs and LPs to transact their business”.
Collins said the first priority for Invest Europe would be to ascertain the exact process ahead and the timetable for its implementation.
“When are key decisions going to be taken? What’s the kind of timetable that both the UK government and the EU member states and the EU institution have in mind for negotiating both the precise terms of the UK’s exit and the precise nature of the future relationship? Right now we just don’t know.”
Following Prime Minister David Cameron’s unexpected announcement on the steps of Downing Street that he would resign and a new leader would take his place in time for the Conservative Party Conference in early October, it is unclear when exactly Article 50 of the Treaty of Lisbon – which contains the rules for exit – will be triggered.
“Our job in the first instance is to get a handle on that timetable and process so that members have some idea of when clarity might be achieved and some idea of when the actual exit might happen,” Collins said.
“Our second priority, I think, is to start talking to all of those that are going to be participating in this process, particularly here in Brussels but at the national level as well, just to remind them of the benefit and the value of the free flow of capital. That remains, I hope, the objective of the European Union… The context for delivery of that has become more complicated, but the need for that free flow of capital is unchanged.”
Collins said that in the run-up to the referendum the main concern for Invest Europe members, whether UK-based or not, has been the uncertainty around what a future relationship between the UK and the EU would look like, particularly in regard to the marketing passport rights under the Alternative Investment Fund Managers Directive.
Some members from the venture capital community are also concerned about whether the European Investment Fund, which was founded in 1994 as a joint venture between the European Investment Bank, the European Commission and a number of European financial institutions, will remain an LP in UK-based funds. The EIF backed 30 venture capital funds across Europe in 2015, according to its annual report.
Collins said that for its part, Invest Europe membership is not confined to EU members, and that UK members will “continue to see the need for and the value of representation at the EU level” by an industry body such as Invest Europe.
“When we get in the future to the ‘new normal’, which could be years away – the new relationship – if the UK is going to be a third-country outside the European Union, then again I think our UK members will want to be part of an organisation that can deliver their message and deliver their views on third-country access issues to EU policymakers.”
Britain’s own industry body, the British Private Equity and Venture Capital Association (BVCA), said in a statement that its council had “already discussed the implications of this momentous decision”.
“We intend to inform members about the politics of what will be a lengthy process of negotiating the exit and we will produce an assessment of the key issues for the industry early next week, with more detailed analysis of the regulatory, legal and tax implications in the weeks to come,” BVCA chairman Alan MacKay and director general Tim Hames said in a joint statement.
“Once it becomes clear who will take charge of the discussions over the UK’s departure from the EU, the BVCA will be intensely involved in representing the interests of private equity, venture capital, Limited Partners, portfolio companies and individual entrepreneurs in that dialogue with the relevant ministers and officials. We will continue to work closely with our colleagues at Invest Europe in this regard.”