Side Letter: Aussie green bank’s PE debut, ILPA’s diversity push, how the pros do Zoom

Our LP Perspectives study is out and the results point to a positive performance from private equity during a time of disruption. Plus: an Australian GP that is benefiting from hard environmental targets; a guide to GP stake deals; Neil Harper on governance; how to look good on Zoom; and more. Here's today's brief, for our valued subscribers only.

They said it

“Eighty percent say current fee terms across private markets are generally too high.”

Asset manager Natixis reports the results of its survey of 500 institutional investors. Of respondents, 69 percent said private assets will play a more important portfolio role going forward.

Just happened

Australian green bank makes PE debut
Adamantem Capital, the emerging Australian manager founded by an ex-Pacific Equity Partners duo, has secured an A$80 million ($59 million; €49 million) commitment on the strength of its commitment to dramatically reduce the emissions of its portfolio companies. The commitment is to the firm’s second fund (which started raising last year) and it comes from Aussie state-owned green bank Clean Energy Finance Corporation. It is the bank’s first ever PE investment.

Adamentem’s fund will, according to a press release, “assess the likely emissions profile of target companies and the companies that it acquires will be required to implement emissions reduction targets that aim to either eliminate or offset their emissions within a decade”. An independent consultant will measure the progress.

CEFC CEO Ian Learmonth said: “The private equity sector is an asset class that is still in the early stages of climate transition. With more than $30 billion of assets under management in Australia’s private equity and venture capital industry, engaging this sector is critical to the continued decarbonisation of the Australian economy.”

LPs reward resilience
This week we are showcasing LP Perspectives: our survey of global institutional investors’ attitudes to private markets. Private equity portfolios have proved resilient in such a turbulent year. That resilience is likely to be what has led to LPs’ positive evaluation. Just 8 percent are looking to invest less capital in the asset class over the next 12 months, while a healthy 45 percent are looking to shift more capital into private equity – considerably higher than we found for other alternative asset classes.

ILPA’s diversity push
The Institutional Limited Partners Association has launched an initiative to encourage investors and fund managers to lead by example on diversity, equity and inclusion. Signatories to the Diversity in Action initiative will be required to undertake four essential DEI actions and at least two additional actions, from an optional set of nine. The initiative has 46 founding signatories. Read more here.


GP interests: who owns what?
Want to catch up on which funds have bought into which firms? This table details instances of GP interest funds taking minority stakes in private fund managers. Think we have missed one? Email us.

Creating an LP-friendly governance model
Governance models at PE firms are often poorly developed and firms should strive for “true partnerships”, writes Neil Harper, former CIO of Morgan Stanley AIP Private Markets in a guest commentary for Private Equity International. Harper, who’s now chairman of emerging manager-focused Zamo Capital and chairman of Turkven, says managing partners should have the confidence to surround him or herself with “true peer partners” who have the maturity to share leadership, provide robust challenge and to dissent where necessary. Read three areas Harper suggests PE firms should focus on here.

Think your Zoom game is strong? 
It probably is not up to Axiom Asia Private Capital managing partner Mark Lau’s. Here’s a video to show you how the pros do it.

Dig deeper

Institution: Ohio Police & Fire Pension Plan
Headquarters: Columbus, US
AUM: $16.24 billion
Allocation to alternatives: 25.92%

Ohio Police & Fire Pension Fund has revealed that for the calendar year 2021, OP&F staff along with investment consultants Wilshere Associates and Aksia Torrey, recommended an investment plan calling for between $80 million and $120 million in new commitments to private equity. The target range is designed to maintain the 8.0 percent target for the OP&F private equity portfolio.

The pension has also approved a recommendation to commit up to $50 million to Raven Asset-Based Credit Fund II, a contact at the pension informed PEI.

The $16.24 billion US public pension has an 8.0 percent target allocation to private equity that currently stands at 9.27 percent.

The pension fund’s recent commitments are to vehicles focused on the financial services, healthcare, business services and technology sectors across North America and Europe.

For more information on OP&F, as well as more than 5,900 other institutions, check out the PEI database.

Today’s letter was prepared by Toby Mitchenall with Adam Le.

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