Side Letter: PE’s tech talent trouble; BNP’s private assets reshuffle; OTPP’s net-zero boss

Just happened

The trouble with tech talent
Post-covid, many private markets firms have had to adapt to a technology-driven, remote way of working. It’s somewhat troubling, then, that a study commissioned by Intertrust Group has found that 75 percent of private capital funds are struggling to recruit and retain new talent, with skills shortages being most apparent in areas such as automation and cybersecurity. The research, Halo Framework, was based on interviews with 150 senior decision-makers in private capital firms, hedge funds and private wealth managers with AUM of between $12.5 billion and $29.5 billion.

More than 60 percent of fund managers expect this talent attraction struggle to worsen over the next five years, with major areas of concern including widening skills gaps due to changing demands (44 percent) and issues related to diversity, equity, inclusion and belonging (41 percent). For automation and cybersecurity, the two problem areas, over half of respondents (56 percent and 51 percent respectively) claiming they will need to develop workaround solutions to mitigate the skills shortfall.

The study also found that many fund managers are no longer insisting on specialist experience when hiring, but instead looking for people with a more generalist background who can upskill or reskill across different areas. As a result, more than 40 percent of respondents believe their existing training programmes will be insufficient and could become a key challenge over the next five years unless they are upgraded. As tech becomes a much larger part of investment processes, investor relations, reporting, deal sourcing and more, firms should ensure they have the adequate resources in place – or viable alternatives – to avoid getting left behind.

BNP’s new look
BNP Paribas is plotting a sweeping reorganisation of its various private markets businesses into a single new unit, per a Tuesday statement. Private Assets, as it is to be called, will become operational from January and sit within its existing BNP Paribas Asset Management business.

The more than €30 billion entity will encompass the bank’s third-party private credit and real assets strategies; Agility Capital, its third-party growth equity subsidiary; and its client investments into third-party funds. It will also include the Danish natural capital business, International Woodland Company, that BNP acquired this month, as noted by our colleagues at New Private Markets (registration required). The reorganisation is understood to reflect growing client demand for private markets across the firm’s various business arms and help foster collaboration between these strategies.

Essentials

Anna-ther ESG appointment

In a year defined by significant LP moves, Ontario Teachers’ Pension Plan reminds us that experienced ESG talent remains in particularly high demand. The Canadian giant has appointed Anna Murray to lead its net-zero efforts and manage its C$5 billion ($3.7 billion; €3.5 billion) climate impact pool, NPM reports. Murray will be responsible for OTPP’s 2050 net-zero goal and integrating ESG risks and opportunities in the pension’s investment processes. Formerly global head of ESG at Sun Life Capital, Murray replaces Deborah Ng, who departed OTPP for asset manager GMO in June.

Murray’s appointment comes at a time when many LPs are directing their investments towards more ESG-friendly opportunities, although OTPP has previously stated that it will remain an “active and engaged” investor in fossil-fuel related assets, saying it believes that retaining a seat at the table is better than walking away, NPM reports.

The pension has thus created a dedicated pool of capital for private markets investments in high-carbon industries, aimed at assisting with their decarbonisation. As part of this, it has expressed a longstanding preference for direct PE investments, our colleagues at Buyouts (registration required) reported earlier this year. Murray, then, is likely to have her hands full.

RedBird’s golden goose

RedBird Capital Partners – the sports and media investor – has teamed up with former CNN chief Jeff Zucker and Abu Dhabi’s International Media Investments to launch a joint venture investment vehicle, per a statement. RedBird IMI will have $1 billion of initial committed capital to acquire and back large-scale media, entertainment and sports content properties around the world. It’s not immediately apparent from the statement whether this capital will come from RedBird’s balance sheet or third parties.

Sports and media has become big business for PE firms during the pandemic, in part thanks to depressed valuations, motivated sellers needing liquidity and diminished revenues. RedBird, which has $7.5 billion of assets under management, has been one of the most active over the past decade, as we reported last year.

Dig deeper

Institution: Arkansas Teacher Retirement System
Headquarters: Little Rock, US
AUM: $19.7 billion

Arkansas Teacher Retirement System has confirmed its private equity pacing plan for 2023 as well as $120 million in commitments, according to materials from the pension’s December board of trustees meeting.

The pension plans to invest $350 million into the private equity market next year and wants to partner with GPs who manage buyout or growth equity vehicles. It will also be allocating capital to one distressed debt fund.

At the meeting, the pension discussed and committed $30 million to Alpine Investors IX and an additional $30 million to-up capital to the following Franklin Park managed funds:

These commitments brings the pension’s total disclosed commitments to Franklin Park managed funds to over $270 million.

The $19.7 billion US public pension has a 15.5 percent allocation to private equity and tends to target buyout funds pursuing a variety of sectors.

For more information on ATRS, as well as more than 5,900 other institutions, check out the PEI database.


Today’s letter was prepared by Alex Lynn with Helen de Beer.