Side Letter: Recruitment in the time of covid-19, SWFs love VC, emerging markets appetite

Would you hire or work for someone you've never met in person? Many wouldn't. Alternatives firms have found novel ways to get around this during the pandemic. Here's today's brief, for our valued subscribers only. 

He said it

“If you are running a private equity fund or a venture capital fund, as I used to do, in your conversations with LPs today they are asking you about impact … you have to have a satisfactory answer. You have to  have a strategy that keeps you on the right side of the asset allocation.”

Sir Ronald Cohen, founding partner and former chairman of Apax Partners, tells a webinar with IPEM that the sense of mission of investors is today being reflected in their fund managers’ investment portfolios.

Just happened

PE recruitment gets creative

Fancy a round of golf as the final stage of your interview for an investment role? How about a bike ride around a park or a game of tennis with a potential boss? These are some of the creative ways employers and candidates in the alternatives industry are getting around lockdown restrictions to hold in-person meetings, as senior editor Andy Thomson found out in the latest Spotlight podcast. According to Will Invine, director of Stem7 Executive Search, there’s a glut of professionals from associate to director level at investment firms whose portfolios have taken a big hit due to the downturn and are looking to jump ship. “There are some really good candidates out there who are currently open to opportunities,” Invine says.

Sovereigns’ VC wealth

Sovereign wealth funds have acquired a taste for VC. Such institutions participated in 142 VC deals worth $13.4 billion last year, more than 19x the amount they invested in 2010, data from PitchBook show. SWF VC investment hit a record $40 billion across 198 deals in 2018. The reason? Companies staying private for longer and increasing deal sizes have made the asset class more accommodating for those needing to invest at scale.

They did the math

EM appetite. Investors plan to increase allocations to emerging markets private capital funds in the medium term (three to five years), but not in the next one to two, according to EMPEA’s latest global LP survey. Economic conditions brought about by the pandemic, political developments in emerging markets, as well as institutional risk aversion, are some of the constraints cited by institutional investors in the survey.

Essentials

How to network in a pandemic

Sister title Infrastructure Investor is breaking ground with the launch of the online and unmissable Infrastructure Investor Global Offsite from 13-15 July. It is an opportunity for infra folk to spend time with peers and rivals, to find out what investors really think and to get set for a post-pandemic world.

Bloomberg on PPP

A report by Bloomberg suggests – without giving any examples or any named sources – that “dozens” of private equity-backed portfolio companies have been benefiting from the Paycheck Protection Program “after the government broadly excluded private equity firms” from the programme. It also makes the error of equating “dry powder” in the form of committed capital to ready cash.

Dig deeper

Institution: CDC Group
Headquarters: London, UK
AUM: £5.8 billion ($7.3 billion; €6.4 billion)

CDC Group has confirmed a $50 million commitment to AfricInvest Fund IV, a contact at the institution informed Private Equity International.

AfricInvest‘s fourth early-stage vehicle will invest in mid-cap businesses active in sectors including financial services, logistics, manufacturing, agribusiness, healthcare and education.

The UK impact investor’s most recent private equity commitments have been to venture capital, growth and buyout funds focusing on the Middle East and Africa.

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


Today’s letter was prepared by Adam Le, Carmela Mendoza and Alex Lynn.


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