The private equity industry in Europe may soon be freed from a double trap that stops many firms raising funds outside their home countries as the European Union relaxes its rules as part of a plan to spur economic growth.

Firms with less than €500 million of assets under management - a large part of the sector - are forbidden by the Alternative Investment Fund Managers Directive to market in other states, and although they are allowed to do so under the European Venture Capital Funds Regulation, many do not because the regulation imposes so many conditions.