Rolf Dienst, the founding manager of Germany-based venture capital investor Wellington Partners, has said Austria could overtake Germany as a tax-friendly base for private equity funds if the German government does not act swiftly to change its regulatory regime.

Speaking at a conference held by Financial News' sister publication Private Equity News, Dienst said: “Unfortunately in Europe we’re in a situation where we have a race between some countries which have nothing to lose. German politicians don’t understand the importance of providing a proper regulatory environment. Most of the largest funds are actually leaving Germany – the largest German buyout fund has €650m in one fund – completely different from the situation in France and the UK.”