Side Letter: IR’s evolving demands; UK’s ethics encouragement; Hg’s tech talk

Regulatory complexity, digestible data and speed-dating were topics du jour at Wednesday's PEI Investor Relations, Marketing & Communications Forum. Plus: The UK government wants private equity to invest ethically; and Hg's head of research weighs in on today's tech climate. Here's today's brief, for our valued subscribers only.

Just happened

IR you being served?
How can investor relations professionals adapt to a fundraising environment that is bigger, faster and more competitive than ever before? That was one of the topics du jour at PEI’s Investor Relations, Marketing & Communications Forum: Europe 2022 on Wednesday in London. Here’s what fundraisers had to say about the evolving role of IR:

  • Digestible data demands: “LPs have changed – previously distribution was through a key relationship manager and now they have more junior resource,” said Catherine Badour, head of IR at Hollyport Capital. “And the junior resource are requiring a lot more data and also digesting the information differently. It’s about engaging the more junior people today… a way to do that is by doing, for example, a video case study, presenting information in more digestible formats.”
  • Local products: AIFMD is proving tricky for IR professionals to get to grips with. “On regulation, I get dizzy when I try to understand each country, what I can and cannot do,” notes Silvia Calvo Alcala, head of alternatives sales at Santander Asset Management. “It gets explained to us by the lawyers but even then it’s a nightmare; it’s very restrictive. I miss those times when there was no AIFMD… we have set up a number of new funds and it’s now a case of we have to think about which LPs we need to attract for that first-time fund.”Ralph Guenther, partner and head of IR for continental Europe at Pantheon, said firms had to approach the continent country by country. “In our case nowadays, we think about doing products for local markets – for example, a product that we can just sell in Spain… and onshore a Spanish structure. We might do the same in Germany, across the DACH markets. I think it’s like you end up with [a] zoo of funds and products as a function of what’s going on in regulation. That’s not good, and it’s bad news for investors.”
  • Speed dating: PE’s frenetic fundraising schedule has left some IR professionals changing tack when it comes to attending conferences. “We’ve adopted a different approach [to events],” said Mat Pearse, head of investor relations at Kreos Capital. “They can become a little bit [like] speed-dating after a while.” Keith Driver, executive director of HRL Morrison & Co, noted that some of the larger conferences (“no names mentioned”) are less conducive to making connections than more focused ones. “You can add 30 meetings in three days and it’s exhausting,” Pearse said, suggesting that it’s more important to find conversations specific to your asset class.
  • Curating LP bases: GPs are becoming more strategic and proactive when it comes to approaching LPs, Brad Ross-Williams, head of IR at East Lodge Capital, told delegates. “Compare that to 10 years ago, you’d do anything you can to get any form of capital… hoping that something works. Now part of the daily job is part of our management committees coming to us and saying, what kind of geographical split are we going to have, what kind of investors are we going to have, what size…  It’s a far more expert process.”

Ethical investing
Richard Fuller, Economic Secretary to the Treasury and MP for North East Bedfordshire, was a surprise guest at the BVCA Summit in London this morning. “There’s more we can do and the government needs you all to do things too,” Fuller told the audience. “First – please make smart decisions… Two – please make ethical decisions. If you’ve got a government that’s on the side of the wealth creators, it’s important that wealth creators make good decisions but also ethical decisions. And thirdly – invest in your people because one of the impediments of the UK’s growth plan is skilling up.”

Essentials

Toms on tech
Over at PE Hub Europe, the newest title in the PEI Media stable, editor Craig McGlashan spoke with Hg’s head of research, David Toms, about the outlook for technology investments in Europe. The bottom line: tech continues to trade strongly, with double-digit revenue and earnings growth. “It also benefits from a high degree of insulation from some of the broader challenges of inflation, with very low input costs and little dependency on energy,” Toms noted. You can read the whole interview, which also covers valuations, exit strategies and other topics, here. Non-subscribers can register for free to view the article.

Climate cash
Private Equity International noted earlier this month that LP appetites for climate funds have grown to such an extent that some consider them an asset class in their own right. As if more proof of climate’s burgeoning appeal were needed, San Francisco VC Activate Capital recently closed its second fund on $500 million – $200 million more than its initial target, and three times the size of its debut fund, our colleagues at Venture Capital Journal report (registration required). Fund II was supported by 30 backers from Europe, the US and South America. The firm targets companies that tackle the roots of climate change issues, including technology-led energy transition, logistics and transportation.

Climate investing has soared in popularity, with some $183 billion raised or in market for the strategy, per Campbell Lutyens. Some of this capital is coming from unexpected sources, such as the Oil and Gas Climate Initiative, which launched in 2016 with backing from energy majors including Aramco, BP, ExxonMobil, Petrobras and Shell. There is some irony in the fact that Activate’s first fund was backed by Alaska Permanent Fund Corporation – an institution originally created to manage oil wealth.


Today’s letter was prepared by Alex Lynn with Carmela MendozaHelen de BeerBill Myers and Tobias Waters