Side Letter: Evercore’s game-changer, LPs and net zero emissions, diversity in France

Talk of the responsible investing town is all about climate change: any manager not thinking about this in an organised way should be warned. Also today: PE Game Changer of the Year, France's positive moves on gender equality and various firms reacting to the coronavirus outbreak. Here’s today's brief, for our valued subscribers only.

Just happened

A climate of change

If there was one topic that dominated discussion at last week’s Responsible Investment Forum (apart from, perhaps, coronavirus) it was climate change. Here’s what we heard:

  • An investment advisor predicted “a very big divide between the pricing of assets that are under very capable stewardship with respect to ESG and climate issues and those that are not”.
  • A European LP noted that – as it strives to bring its own greenhouse gas emissions to net zero – it is pushing its direct investments to articulate what “net zero” looks like. The same goes for its fund managers – if it wants to be net zero, its third-party managers must be too.
  • Day Two’s climate change panel focused on the need to get to grips with the rapidly changing nature of the risk factors associated with extreme weather events, and thus be better able to measure and manage them.

Better call Saul

Saul Goodman

In case you missed it last week we unveiled – among our awards winners – our Game Changer of the Year. This is the one award we do not put to a reader vote: our editorial team chooses the winner. This year we opted, unusually, for a banker. Evercore’s Saul Goodman and his team are the “gorillas” when it comes to advising general partners on minority interest deals. You can read our case for Goodman’s game-changer status here.

When we caught up with Goodman, we asked him where this market was heading, because it looked to us like most of the dealflow (PE franchises with enough clout and history to merit investment) had already found dance partners. As well as other private asset classes (infrastructure, private credit, etc), he was keen to stress European managers as the next frontier. His team had advised BC Partners on its investment from Blackstone last year.

Right on cue: news broke last week that Permira, a European franchise with clout and history, was in talks to take an investment from Goldman Sachs’ Petershill Funds (Wall Street Journal – paywall). Both parties have declined to comment on the story and there is no word yet on whether Evercore is involved.

If you are a GP wondering whether you go down this route, then this two-parter (part one and part two) should tell you what you need to know.

Egalité, s’il vous plaît

The French private equity community has made a measurable commitment to foster a better gender balance at the investor, GP and portfolio company level. Eighty percent of France Invest’s members (255 organisations) have signed up to the association’s charter to promote gender equality in private equity. The charter is extensive and detailed, listing 30 commitments. It’s a useful roadmap for any firm wondering how to change a male-dominated investment culture.

He said it

“Impact investing was investing in Tesla, but now it needs to be investing in Ford to launch the electric Mustang.”

An impact investor highlights the changing nature of the strategy at the Responsible Investment Forum New York.

Essentials

Sequoia sounds the alarm (again). Sequoia Capital, publisher of the infamous RIP Good Times presentation in 2008, has sounded the alarm once again. In a Thursday memo to portfolio company founders and chief executives, the VC giant warned that coronavirus is the “black swan of 2020”. Sequoia pointed to the likelihood of a drop in business activity, supply chain disruptions and curtailed travel as a result of the virus, which could take several quarters to contain. The firm urged execs to take a rigorous look at elements such as ease of fundraising, headcount and capital expenditure in light of these headwinds.

How lenders should respond to covid-19. How asset managers respond to the coronavirus epidemic will set the tone for fundraising for a decade, says James Newsome, founder of tech platform Arbour, writing for sister title Private Debt Investor. His warning – directed at the private credit industry – is that credit managers must prove themselves better than the banks did in 2008 by collaborating with borrowers on refinancings, enforcing true downside protection for borrowers, and through open communication with investors. “We all have wise choices to make,” Newsome says.

Covid-19 operational precautions. Secondaries heavyweight Coller Capital is among many firms advising partners of operational changes in light of the outbreak: anyone returned from a “high-risk” country is asked not to enter a Coller Capital office or meet with an employee face-to-face for 14 days. Apax Partners and Blackstone have both called off physical investor meetings as precautionary measures, reports the New York Times. Law firm Kirkland & Ellis’s annual London private equity bash tonight at Annabelle’s was called of last week.

Goldman to buy in TPG talent deal. Goldman Sachs has emerged as the lead investor on a deal to roll Creative Artists Agency, one of the world’s largest talent agencies, from a 2008-vintage TPG fund into a continuation fund. If it all goes through, the deal will likely be worth around €1 billion. Secondaries Investor has the details.

Dig deeper

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


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Today’s letter was prepared by Toby MitchenallIsobel MarkhamAdam LeRod JamesCarmela Mendoza and Alex Lynn.


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