More female leadership at private equity firms doesn’t translate into better returns, but may help with team building and office dynamics, according to Coller Capital’s latest half annual survey of private equity investors.
The survey of predominately male investors found that 88 percent of LPs don’t believe a higher proportion of women in senior positions at the firm would directly impact returns. Those that did (12 percent) said it would make a positive difference.
However outside of performance, a majority of LPs (60 percent) believe the firm benefits “more broadly” from gender diversity, the study found.
Specifically “team quality” and “team dynamics” benefit most from gender diversity, most LPs believe. Around 40 percent of these LPs also say that GPs’ governance, investor relations and risk management functions are also positively impacted.
The survey findings come at a time when the private funds industry has been starting a bigger conversation on its lack of gender diversity. According to a recent report by New Financial, just 9 percent of private equity senior management, directors, partners and chief executive offers were female. At pension funds, the industry’s largest investor base, female representation at the senior level was 27 percent.
At PEI’s Women in Private Equity Forum in London this month, industry representatives debated the lack of gender diversity and ways to address it. Delegates noted that the lack of women in junior positions makes it more difficult for women to move into leadership roles. Some pensions have started to push for greater diversity, however, at least on corporate leadership teams. The Thirty Percent Coalition and led by The California State Teachers’ Retirement System (CalSTRS), recently reached out to 100 companies in the Russell 1000 Index with a lack of women board directors, urging them to embrace gender diversity.