Side Letter: Ares performance, KKR in India, PE’s WFH revolution

Some data on working from home for PE professionals. Plus: Ares' performance visualised, record breaking in India and more. Here’s today's brief, for our valued subscribers only.

They said it

“You can’t serve two masters. You can’t serve patients and investors.”

A doctor who worked at a private equity-backed chain of clinics, US Dermatology Partners, questions the sustainability of PE investment in healthcare practices in a Bloomberg long read.

Just happened

Waking up to WFH

Flexible working was not fashionable in PE before 2020. Only 7 percent of private markets professionals regularly worked from home, said a survey of 311 of them by eVestment and MJ Hudson. Of those, 80 percent were senior team members. Junior staff were absent from the group. “Working from home is a privilege to be earned, rather than a right, it would seem,” noted the report’s authors.

The report – on work-life balance in PE – landed in the Side Letter inbox soon before the world was turned upside down by covid-19. Pandemic-related events shunted it to the bottom of the news pile. Now, as most PE professionals have come to terms with their newfound privilege of working from home, the report merits another visit.

There is much that won’t surprise: 9 percent of respondents typically spend more than 58 hours a week in the office. Thirteen percent described work as one of their “key evening activities”, thankfully behind spending time with the family (50 percent), exercising (27 percent) or watching TV (32 percent). Only 2 percent said work was part of their typical weekend.

The data were gathered in a pre-pandemic world – there is a nostalgic section on commuting, for example – but the report is still worth the attention of leaders in private markets. For one thing, it highlights the risk to businesses of employee burnout or stress. It also proposes more flexible working practices to allow employees to engage more with their personal motivations, or “life”.

“It’s pretty simple: in their personal lives, respondents overwhelmingly (62 percent) said that their family or children were what motivates them most,” the report concludes. “It seems that simply allowing staff the flexibility to engage fully in family life will bring dividends.” It will be interesting to see whether this is embraced as and when the pandemic subsides.

Other findings:

  • The three big professional motivators for private markets professionals are: money, career success and making successful investments. Those in leadership roles place less importance on money and career success (presumably because both have already been attained). Money is the biggest motivator among operations, admin and legal staff, as well as IR professionals.
  • When asked about their responsibilities, none of the 80 limited partners surveyed identified theirs as delivering returns for stakeholders. Instead they described the tasks they complete day-to-day: fund selection, monitoring etc. “Why such a focus on the journey rather than the destination?” the authors ask.
  • In terms of what they enjoy about their jobs, PE professionals’ top two choices were working with clients and working with colleagues; these are people-people. Having a positive impact, meanwhile, was cited by just 5 percent of respondents.

Check out the full report here.

Essentials

Super withdrawals. Aussie supers have paid out A$9 billion ($5.9 billion; €5.4 billion) under the Covid-19 Early Release Scheme, sister title Infrastructure Investor reports. AustralianSuper, which has more than A$180 billion in AUM, topped the list with A$1.14 billion of payments as of 10 May. Damian Graham, CIO of the A$96 billion First State Super, dismissed liquidity concerns in April, telling PEI the fund was testing liquidity daily and held a buffer of “highly liquid-liquids”. It has paid out A$142 million under the scheme.

Mumbai buy buy. India is breaking records in 2020. KKR’s 113.7 billion rupees ($1.5 billion; €1.4 billion) investment into Indian digital services business Jio Platforms last week was the largest from its Asia private equity business to date, per a statement. Jio has raised 671.9 billion rupees from investors such as Facebook, Silver Lake, Vista Equity Partners and General Atlantic over the past four weeks. General Atlantic’s 66 billion rupees investment was also its largest to date in Asia-Pacific.

PE faces ‘day of reckoning’. A long read in The Times (paywall) links a few running themes: PE’s public image issue, its inability to access covid-19-related state aid, and whether dry powder should find its way back into the portfolio. Nothing new for Side Letter readers, but a useful summary of the story so far.

He said it

“We hope that the economic contribution made by private equity-backed enterprises, and other types of growth business, will be recognised and the exclusions removed. That would ensure that the support could, where needed and appropriate, catalyse their contribution to the UK’s recovery.”

The head of UK PE lobby group Michael Moore writes to the Financial Times (paywall) in response to its article on how PE-backed business were being excluded from state aid because of their capital structure.

We did the math

Performance watch. We examine Ares Management’s private equity funds in a special series of Performance Watch, which compares the firm’s first quarter 2020 figures with those from the prior three months. Also in the series: Apollo, Blackstone and Carlyle.

Dig deeper

LP meetings. It’s Tuesday, so here are some LP meetings to watch out for this week.


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Today’s letter was prepared by Toby MitchenallCarmela Mendoza and Alex Lynn.


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