Side Letter: Brookfield’s $15bn potential; Level 20’s chair; ESG’s lucrative talent war

Brookfield is upping the stakes with its latest private equity flagship. Plus: industry non-profit Level 20 has appointed a new chair and in-demand ESG specialists are making seven-figure salaries. Here's today's brief, for our valued subscribers only.

They said it

“Carve-outs can be complicated and can be very painful, especially if not well planned by the seller. And, therefore, key for me is looking at the cashflow of the business – that’s one thing that shouldn’t lie.”

Riccardo Basile, a principal at Permira, tells delegates at Private Equity International‘s Operating Partners Forum: Europe 2021in London last week that buyers should pay attention to cashflows, existing contracts and value leakage during carve-outs.

Just happened

Brookfield’s billions
Brookfield Asset Management appears to be the latest blue-chip firm hoping to capitalise on today’s potent fundraising environment. The firm is targeting $12.5 billion for a sixth flagship buyout offering and could raise as much as $15 billion, our colleagues at Buyouts report, citing anonymous sources (registration required). The latter figure would represent a roughly 67 percent increase from its 2018-vintage predecessor, according to PEI data. Here’s what you need to know about the firm and its latest vehicle:

  • Brookfield, which typically makes hefty commitments to its flagship vehicles, is likely to invest $3 billion to $4 billion in Fund VI.
  • The firm plans to expand its strategy to include the red-hot healthcare and technology sectors; the transition to a net-zero economy, a key Brookfield theme, also will be a priority for the new fund.
  • Fund V, wrapped up two years ago on $9 billion, has led acquisitions of six companies this year, with a total equity invested value of $7 billion.
  • Brookfield aims to make private equity the same size and scale as its infrastructure and real estate businesses.
  • This will be aided by its new special investments fund, which is seeking $5 billion, and an upcoming long-hold strategy.

Don’t miss!
The issue of gender diversity, or a lack thereof, has well and truly risen to the fore during the pandemic. The world’s leading diversity event focused on alternatives, PEI Media’s Women in Private Markets Summit, is returning to London on 1 and 2 December. Attendees will have the opportunity to hear from the likes of Employees Retirement System of TexasUSS and AllianzGI; build their cross-asset network; and meet institutional investors. Learn more about the event, including how to book your place, here.

Social climbers
It’s no secret that ESG-related expertise is in high demand at present. One consequence of this dynamic is that sustainability specialists are finding themselves in a substantially higher income bracket from the one they inhabited several years ago, Bloomberg reports (subscription required). Pay levels have risen between 50 percent and 100 percent over the past year, the report said, citing private equity recruiters. ESG heads can now earn seven-figure salaries and are beginning to see profit sharing as a remuneration method.

Good news then, for those boasting ESG credentials on their LinkedIn profile, and less good for those whose job it is to sort the signal from the noise in a world where more people than ever are eager to flash their green, responsible credentials, as affiliate title New Private Markets noted in April (registration or subscription required). “There has been an explosion of role types and specialisms so it’s hard to navigate from someone’s LinkedIn profile to determine what their particular role and expertise is,” Helen Pradas-Page at specialist ESG recruiter Acre Resources, said at the time. “If you’re not familiar with the talent pool everyone can look like an ESG specialist.”


Chairing is caring
Level 20, a not-for-profit organisation focused on improving gender diversity in the European PE industry, has appointed Jennifer McMahon, a principal at Dublin-based life sciences firm Seroba, as its international chair. Level 20 now has more than 3,000 members, at least 900 of whom are based outside its founding country, the UK. It has 12 international committees operating across DACH, France, Ireland, Italy, the Netherlands, the Nordics, Poland and Spain.

In addition to its advocacy, networking and mentoring activities, Level 20 instigates research into female representation in private equity markets at the country level. So far, it has published research on the PE industries in the UK, Spain, the Netherlands and Poland.

“As highlighted in the diversity and inclusion reports published… we have a lot of work to do to achieve 20 percent representation of senior leaders in PE, but we now have more granularity on our baselines with country-specific insights for improvement,” McMahon wrote in its latest annual review. “Over the course of the next year we will broaden this international dataset and work together towards gender parity.”

Dig deeper

Institution: Washington State Investment Board
Headquarters: Olympia, US
AUM: $142.5 billion
Allocation to alternatives: 42.02%

Washington State Investment Board has approved $350 million to BGH Capital Fund II and $200 million to GTCR Strategic Growth Fund.

The pension has a 23 percent target allocation to private equity that stands at 25.56 percent. WSIB’s recent private equity commitments have tended to target diversified sectors in North America.

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

Today’s letter was prepared by Alex Lynn with Carmela Mendoza.