Side Letter: PE’s response to climate change, Iran’s PE scene, SEC to probe ESG

How will PE respond to the climate change? We are about to find out. Also: the SEC is probing ESG (as sister title Private Funds CFO said it might) and how do country funds measure up against their regional equivalents? Here’s today's brief, for our valued subscribers only.

Just happened

Climate crisis

A fire i QueenslandIt’s too soon to know how the Australian bushfires affect PE portfolios. We understand, for example, that Accolade Wines, one of the country’s largest wine producers and a Carlyle Group portfolio company, has seen limited impact on its vineyards, but doesn’t know the extent yet. Certainly the broader tragedy should create more urgency among institutional investors’ to appraise how climate change will affect their portfolios. One Aussie firm – Adamantem Capital – has previously engaged climate change experts to assess changing risk across its portfolio, its director of responsible investing tells PEI. Industry adoption is due in part to pressure from investors like Future Fund, which is actively monitoring how external managers are addressing climate risk as part of its response to changing weather. Tomorrow we’ll bring you some more thoughts on this from our infrastructure senior editor, Bruno Alves.

Shot across the ESG bow

The SEC’s Office of Compliance Inspections and Examinations just released its exam priorities for the year. Interestingly, it makes mention of the accuracy and disclosures made in relation to ESG investments. Says the document: “OCIE has a particular interest in the accuracy and adequacy of disclosures provided by RIAs offering clients new types or emerging investment strategies, such as strategies focused on sustainable and responsible investing, which incorporate environmental, social and governance (ESG) criteria.”

A frontier market closes

In 2016, PEI spoke to optimistic Iran-focused GPs on how the lifting of international trade and sanctions prompted a renewed opportunity for PE investment in the country. Turquoise Partners, Canton Hermidas and Griffon Capital at that time were all raising capital targeting at least $100 million each. No word from the firms this week on whether they are still operating or trying to raise capital – calls and emails have not been returned. Market participants in the region say it is highly unlikely.

Essentials

Vote now. We’ve had a remarkable 10k-plus votes cast in the 2019 PEI awards process. Even more remarkable is that many of the categories are still on a knife-edge; at the time of writing, just one vote separates first and second for the firm of the year in Japan. Not yet voted? You have until the weekend.

Country vs region. All things being equal, should you choose a pan-regional or country-focused fund? According to data from CEPRES, it depends on which region you are considering. Dedicated China and India funds, for example, returned 1.51x and 1.44x respectively on a 10-year basis, compared with a 1.41x average for pan-Asian strategies. The trend, however, doesn’t extend to Europe, where intimate knowledge of a country is less of an advantage. Dive into the data here.

Inside tip

Have news or views you’d like to share with us in confidence? We’d love to hear from you.

Dig deeper

Iowa-nt more PE! Iowa Public Employees’ Retirement System is ploughing an addtional $700 million into private equity, through a commitment to Pathway Private Equity Fund XXV: a fund-of-one managed by Pathway Capital Management with IPERS as the sole limited partner. Find out more here. Here’s a breakdown of the $21.01 billion US public pension’s total investment portfolio. For more information on more than 5,900 other institutions, check out the PEI database.

He said it

“Our investment brand is strong and getting stronger.”

Platinum Equity fundraising chief Mark Barnhill feels the power of an over-subscribed $10 billion fundraise. Platinum press release here.


We would love your feedback to help us make this newsletter more useful; click here to give us your opinion.

Today’s letter was prepared by Toby MitchenallGraham BippartCarmela Mendoza and Alex Lynn.


Subscribe now and get Side Letter delivered to your inbox each day

To find out how, email peisubs@peimedia.com, or call our team:

London: +44 207 566 5432
New York: +1 646 545 6296
Hong Kong: +852 2153 3140