Side Letter: PE vulnerable after Dems’ Senate victory?

What the Democrats' Senate victory could mean for PE. Plus: PE giants throw their weight behind racial equality group and family offices are hungry for more PE. Here's today's brief, for our valued subscribers only.

They said it

“It is deeply unsettling after the contentious and bitter election process, which put tremendous strain on all of us. Our country is better than this, and deserves better than this.”

Carlyle’s chief executive, Kewsong Leedecries the violence in Washington DC on Wednesday as Congress met to certify Joe Biden’s election win.

Just happened

Calling Dem as we see them
As shocking scenes unfolded in Washington DC on Wednesday afternoon and into the evening, two election victories in Georgia meant the Democrats will take control of the US Senate. Here’s some of what the result could mean for the private equity industry:

  • Retirement funds: The Department of Labor’s June guidance regarding defined contribution participation in PE was issued via an informal “information letter”, which could be vulnerable to a pull back.
  • Carried interest: Progressives might have another crack at changing the way carried interest is taxed, one of the main issues targeted by Senator Elizabeth Warren’s Stop the Wall Street Looting Act of 2019.
  • SEC: The regulator has shifted away from a singular focus on enforcement but might lean more into tackling financial crime and rules violations under a Biden administration, potentially resulting in a more intense programme of auditing PE firms.

Read sister title Buyouts editor Chris Witkowsky’s full take here.

DE&I another way
PE’s push on diversity, equity and inclusion shows little sign of losing momentum in 2021. BlackstoneKKRClayton, Dubilier & Rice and Livingbridge became the latest members of London-based organisation Black Women in Asset Management this week, per a statement. Launched in 2019 with founding sponsor TowerBrook Capital Partners, BWAM is urging organisations to promote racial equity and “go beyond solidarity statements and instead commit to action, activism and accountability”.

The group’s mission echoes an Institutional Limited Partners Association initiative launched in December encouraging LPs and GPs to lead by example on DE&I. Sister title Private Funds CFO caught up with key leaders from Blackstone, KKR and Carlyle Group in December to discuss how the industry can leverage its economic and social power to promote change.


For those who took a break from the exhaustion that was 2020 and abstained from checking emails during the holidays, here are some highlights from PEI‘s end of year coverage:

Family offices are hungry for PE
More than half (55 percent) of family offices expect to grow their exposure to PE, according to BlackRock‘s inaugural Global Family Office Survey, published on Wednesday. On average, such institutions allocate approximately 35 percent of their portfolios to alternative asset classes, within which 10-25 percent is to PE. Finding a replacement for fixed income was the top priority for CIOs tweaking their allocations.

Third-party in the PKA
Institutional Investment Partners Denmark, the PE unit of Danish pension PKA, plans to add third-party capital to its $10 billion of AUM via separately managed accounts for smaller Danish pensions and family offices, managing partner Anette Eberhard tells PEI. The SMAs would be in line with IIP’s investment strategy of investing in lower mid to mid-market PE firms. Its compatriot ATP Private Equity Partners made a similar decision last year, announcing plans to raise its first third-party fund.

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

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