Side Letter: Europe’s best PE market for women; Brookfield’s 6x return; LACERA’s boost

Ireland has the highest proportion of women in senior investment roles, according to Level 20. Plus: Brookfield's cross-fund transaction delivers for LPs and LACERA wants to co-investments and secondaries. Here’s today's brief, for our valued subscribers only.

Just happened

More than just luck: Ireland tops Level 20’s latest list (Source: Getty)

The best country in Europe for gender promotion
Ireland leads the way in terms of gender diversity when it comes to women in senior investment roles in the PE and VC industry, according to a report from Level 20. Around 28 percent of such roles at investment firms in the country are held by women – the highest in Europe, according to the lobbying body’s European gender diversity report 2022 (initially published in August and re-released today with detailed country summaries). Ireland, it should be noted, has a relatively small number of investment firms and professionals, which means it’s somewhat of an outlier when it comes to DE&I figures. France, which has a much larger private markets investment industry, comes in second with women accounting for 15 percent senior investment roles.

The industry average is 10 percent, with the UK, Italy and Norway all at this level.

Level 20 has also published a benchmarking tool that allows GPs and LPs to compare levels of diversity in their own teams and against peers. Details here.

Brookfield’s ‘ideal’ transition asset
Brookfield Asset Management scored a 6x return and an internal rate of return of approximately 60 percent when it sold Westinghouse Electric Company – an asset it acquired in 2018 in a bankruptcy proceeding – from Brookfield Capital Partners Fund IV to its $15 billion Global Transition Fund, according to the firm’s latest letter to shareholders. Brookfield, which initially set out to run a sale process, decided later that “given what is going on in energy globally, this could be the ideal transition asset and a new pillar on which our renewable company and global transition partners could contribute to a carbon-free future”, chief executive Bruce Flatt wrote in the letter. “A sale to our Transition fund had the advantage (to the benefit of all parties) of not presenting change-of-control risks on the financing (as we control both), and few approvals required to buy the asset.”

He also noted that Westinghouse was a strategic asset to the US and if it were sold outright, there was “significant risk that governments wouldn’t approve the buyer”.

Selling an asset from one fund to another vehicle managed by the same GP isn’t new. Doing so for national security reasons may well be. Regardless, LPs are likely to be on board with the transaction, which will generate $8 billion of proceeds and $4.5 billion of total profit for the firm and its investors.

Here are other takeaways from the firm’s Q3 results.

  • Brookfield’s asset management business will begin to trade later this year (here are three things to know about the listing).
  • The firm is on track to have its largest fundraising year with inflows for the third quarter reaching $33 billion. This was driven by first closes held for its sixth flagship PE fund, which is seeking $12.5 billion, and fifth flagship infrastructure fund at approximately $8.4 billion and $21 billion, respectively. It has also raised $14 billion in the quarter across other strategies including opportunistic credit and infrastructure debt.
  • It is already thinking about the sophomore Transition Fund. Roughly half of the $15 billion fund has been deployed and there are significant opportunities that are vast and some, very large in size, said Flatt. “At some point we will move on to 2.0. Hard to say exact timing, but the pace of deployment is going well.”

Essentials

Secs (co-investments) on Venice Beach
Los Angeles County Employees’ Retirement Association could bump the amount it allocates to its co-investment and secondaries programmes. LA County investment staff would like to allocate up to 30 percent of its private equity portfolio to its two co-investment and secondaries programmes, an increase of 5 percentage points from the top of its current range, affiliate title Buyouts reported (registration required). The $67.6 billion system has an externally managed co-investment/fund of funds/secondaries strategy along with an in-house co-investment/secondaries programme, which have a combined market value of $2.7 billion – or 21 percent of the private equity portfolio’s NAV – as of the end of June, according to documents prepared for the pension’s latest meeting. Staff estimate the two programmes will reach 28 percent of the portfolio’s NAV by end-2024.

According to the documents, the system has saved $20 million in fees through the co-investment/secondaries programmes since their inception. Since 2019, co-investments have delivered a 46.5 percent net IRR and secondaries 25.7 percent, beating the overall private equity performance of 24.8 percent.

Dig deeper

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

14 November

15 November

16 November

17 November

18 November


Today’s letter was prepared by Alex Lynn with Adam LeCarmela MendozaMadeleine Farman