Vincenzo Morelli doesn't do downbeat.
The newly elected chairman of the European Private Equity and Venture Capital Association, or EVCA, says he is one of those who believes the euro will survive the current political and financial storms -- even if the exact borders of the euro zone may change. The common currency's difficulties will not prevent private equity investors from putting money into the euro zone, he believes.
"The industry is not going to stop in its tracks unless there's a cataclysm," Morelli said in an interview at EVCA's annual symposium in Barcelona. "Nobody in this room believes there is going to be a cataclysm."
Far from believing that private equity will hold back while the banks avoid lending, Morelli makes the case that private equity is best placed to fill the gap. "I do believe private equity is an underexploited force for growth," he says. Pointing to new and "overdue" prudential regulation of banks, weak stock markets and busted government budgets, he believes all of these have "made existing systems to finance companies in a number of countries obsolete."
"Private equity is almost your only hope to be able to channel long-term savings and resources to their best possible uses. There's really nobody else."
Morelli, who took over as the industry association chairman from Karsten Langer of Riverside Partners Europe SPRL on June 7, is no wide-eyed newcomer with a rose-tinted view of investor sentiment. A former operating partner -- and now "partner emeritus" and senior adviser -- at TPG Capital, Italian-born Morelli has had a long career in management and private equity on which to base his judgments.
He joined TPG in 2005 after serving as a turnaround specialist at Alvarez & Marsal LLC. His 37-year business career started in 1975, at Boston Consulting Group, and included an eight-year stint at General Electric Co. between 1983 and 1991, where he was president of the European medical-systems business. He has also served as a senior adviser to Clayton, Dubilier & Rice Inc.
Ever active, Morelli has also served as EVCA vice chairman since 2010 and has chaired the association's large buyout group. He knows the views of his constituents. And when he talks of the progress achieved in convincing European Union regulators and politicians that private equity can be a force for good in the economy, he sounds positive without overstating the case.
"Today," Morelli says, "there is a better understanding of the industry among politicians and regulators" than there was when EVCA started lobbying for private equity and venture capital to be treated separately from hedge funds in the European Union's post-financial crisis Alternative Investment Fund Managers Directive.
"We're about one-third of the way there," he concludes. "Most of the work still needs to be done, but our members are fully aware of the problem and are fully committed to ensuring our message continues to be put across."
Since the regulatory onslaught started, EVCA has been forced to expand its role. As well as achieving some improvements in the AIFMD, the association has been lobbying hard to get European regulators to back away from a demand that insurance companies set aside regulatory capital of 49% for every euro invested in a venture capital or private equity fund. The stipulation has forced insurers to reduce their commitments to private equity or leave the asset class altogether, and there are now fears that the same requirement will be applied to pension funds.
But Morelli, who sees the pension fund regulation as a "real threat," expects that EVCA will keep fighting the provisions on his watch and will make a difference in the end.
Just where will he find the time for this extra commitment? In fact, Morelli, who lives in London and turns 58 in July, sees the new role as an opportunity to slow down a little. The partner emeritus position at TPG is, he concedes, a form of semiretirement, although one that in his case means he'll reduce his working time from 80 to maybe 50 hours a week.
He will no longer be a salaried member of the TPG team but will retain an advisory relationship with the firm, remain part of the holding company partnership and continue to chair a couple of its portfolio companies. But by becoming what he calls a free agent, he will have more time to devote to both his family and other interests, including not only the EVCA but also various charities.
How much he will actually slow down remains to be seen. When he joined TPG, he told The Deal magazine he hoped to spend less time living out of a suitcase, and having to appear in Milan or Düsseldorf or some provincial town at 8 a.m. on a Monday. Since then he has been clocking about 250 hotel nights a year.