Side Letter: Diversity index, Ares soccer plans, Carlyle on climate change

An in-depth tour of one firm's approach to climate change and more details of Ares' plan for soccer domination: here's today's brief, for our valued subscribers only.

He said it

“It is something we believe strongly about, and if we believe strongly about it, it ought to affect a person’s career, a person’s advancement and a person’s compensation.”

The Carlyle Group CEO Kewsong Lee talks at the Bloomberg Equality Summit about the firm’s move to make progress on diversity, equity and inclusion initiatives a factor in compensation and promotion decisions.

Just happened

Game plan

On Thursday night, PEI published exclusive details about Ares Management’s plan to create a top-flight football super-group, comprising multiple football clubs and academies around the world. The report is part of a wider investigation into PE’s growing enthusiasm for global sports industry assets. Some key points from Alex Lynn’s report:

  • The group will acquire 80 percent of an unnamed English Premier League club (exclusive letter of intent has been signed) at a valuation of around 1.3x revenue, with the option to acquire the remaining 20 percent on favourable terms. The deal is expected to cost around $210 million, with roughly an additional $50 million for follow-on capital. It will also acquire a number of training academies, before moving onto “phase two”: acquiring a further three to five clubs and further academies.
  • The group aims to replicate the success City Football Group, a holding company that owns 24 men’s, women’s and youth teams globally, including Manchester City FC, which has won the Premier League multiple times under its ownership. CFG is owned by Abu Dhabi United Group, China Media CapitalCITIC Capital and US tech giant Silver Lake, which invested $500 million last year.
  • Exit would be by way of an IPO or sale of ownership stakes to large institutional investors.

Plenty more detail in Alex’s report here.

Unofficial business

Several large institutions have placed a moratorium on external meetings during the pandemic, yet PE executives at one such entity in South-East Asia have found a novel solution. Its staff have been meeting GPs for coffee in an ‘unofficial’ capacity in recent months, meaning they are not technically breaking any rules, according to one senior executive at an Asian firm that is currently fundraising. Such processes may be less virtual than firms have been letting on.


A must read on PE and climate change

Carlyle, unlike its listed peers KKR and Partners Group, doesn’t have a dedicated impact strategy. Nor is it plotting one, like Apollo and Blackstone. Instead it has put its sustainability chips down on a plan to create a positive impact across its entire portfolio. This interview with Carlyle’s head of impact Megan Starr describes how the firm is trying to harness opportunities and manage climate risks, at a time when the environmental imperative has been bumped down the global agenda in favour of social issues.

Loan portability

The introduction of portability language into loan documentation, which allows debt to be transferred from a seller to a buyer, is another sign of creditor’s weakening power in a borrower’s market, reports the Financial Times (paywall). The paper quotes Ron Launsbach, portfolio manager at Columbia Threadneedle: “We don’t like it at all.”

Hard data on diversity

It’s becoming a running theme in Side Letter (see this time last week): gathering data on diversity that helps investors make decisions. The latest development comes from Austin, Texas-based fintech business Lenox Park Solutions. The company has launched the Lenox Park Diversity Impact Score (LPI for short), which measures diversity, equity and inclusion at asset managers.

Scoop catch-up

In case you missed some of last week’s exclusive intel on PEI, these were the most read scoops:

Dig deeper

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

30 September

1 October

2 October

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

Subscribe now and get Side Letter delivered to your inbox each day
To find out how, email our team: