EU Internal Market Commissioner Charlie McCreevy has spoken out in support of private equity today to counter recent criticism by labour unions and some politicians.
"The private equity industry is the most critical source of capital for start-up and developing businesses that stimulate innovation, competitiveness and growth," Mr McCreevy said.
"There is a big selling job to be done. The industry must go out and tell the many stories of success," he added in a speech to British legislators.
Private equity firms spent €500 billion last year on takeover deals globally, but labour unions say their aggressive behaviour can destroy jobs in companies they acquire.
Mr McCreevy said it was for regulators to monitor risk closely, and that asset disposals were part of a private equity company's plans for transforming the businesses they invest in. Huge bonuses paid to some private equity managers could be justified when they outperform substantially, he added.
"If those rewards are properly performance driven I ask myself why they should be less acceptable than performance fees paid to professional golfers or transfer fees paid to professional footballers," Mr McCreevy said.
Mr McCreevy is looking at how to tear down national barriers that prevent private equity firms from operating easily across borders in the 27-nation bloc. A working group was drawing up a "comply or explain" code for the industry to boost transparency, he said.
The commissioner has repeatedly refused to propose EU-wide regulation of the industry.