Side Letter: Warren Act rebuttal, LPs’ diversity push, PEI Awards countdown

LPs opine on diversity; US lobby group's Warren counter-attack; finding the true value of a technology. Here’s today's brief, for our valued subscribers only.

Just happened

Are LPs doing enough?

Investors are increasingly including diversity and inclusion considerations in their GP selection process – but that isn’t enough, said delegates in PEI’s Women in Private Markets Forum in London last week. In this three-minute video, delegates – including DWS Private Equity’s Anamica Broetz (pictured) – agreed LPs need to exert more pressure on GPs that lack diversity.

Stop the Stop Wall Street Looting Act

Lobby group the US Chamber of Commerce has weighed in on Senator Elizabeth Warren’s Stop Wall Street Looting Act. The body yesterday published a report examining the impact of the proposed act on the US economy. Key findings include that Warren’s Act would lead to:

• as many as 26.3 million jobs lost across the US;
• a combined $475 billion loss in annual tax revenues in federal, state and local government tax revenues in a worst-case scenario;

• companies that normally seek private equity financing being unable to find financing and fail or downsize;

• the death of the private equity industry.

Sombre findings indeed, which are, of course, to be expected from an industry lobby group. Read the full report here.

Asia LPs open the door to private debt

If you’re looking to woo Japanese and Korean investors with your private credit fund, highlight your failures. Reporting from sister title Private Debt Investor’s back-to-back conferences in Tokyo and Seoul, PDI Americas editor Andrew Hedlund writes that investors want to hear about lessons learned from past mistakes and how managers will avoid similar errors in the future. “There was an overwhelming message from both sets of investors: get to know us and we will appreciate the effort,” he writes. This can take time: one Korean investor noted his firm takes years to get to know GPs before it commits money.


Tech special continued. Every investor wants exposure to technology and there are more ways than ever to get it. Putting a price on these high-growth, super-scalable businesses is far from easy, says KPMG Enterprise’s Matthew Warren, as part of our ongoing tech investing special this week. How should these companies be valued? And how do you look past the hype to true value of a technology? Find out here.

Special (S)K. SK Capital is the latest firm to raise a lower mid-market fund to accompany its flagship vehicles. The firm, which focuses on speciality materials, chemicals and pharmaceuticals sectors, held a one-and-done on its debut Catalyst fund on its $400 million hard-cap. The business line gives the firm the talent and capital resources to “complete any investment in our sector across the entire waterfront of the deal size”, managing director Jack Norris tells us.

The clock is ticking. There’s just three days left to send in your submissions for the PEI Awards 2019! Entries close this Friday. Don’t miss this opportunity to share your highlights with us. Click here to enter.

Dig deeper

Korean portfolio construction. Construction Workers Mutual Aid Association has issued an RFP for private equity fund managers in South Korea. The association aims to commit a total of 50 billion won ($43.2 million; €39.1 million) to two domestic blind-pool funds. Here’s a breakdown of the 3.8 trillion won South Korean public pension fund’s total investment portfolio. For more information on CWMAA, as well as more than 5,900 other institutions, check out the PEI database.

Chart showing investment portfolio allocation from CWMAAHe said it

“[Private equity] provides easy, good advice for companies that are trying to grow, who are trying to turn around. If we are going to basically shut that industry down … those are not ramifications that are only going to be felt on Wall Street. That’s going to be felt on Main Street, felt by retirees and felt by workers of those firms.”

Tom Quaadman, executive vice-president at the US Chamber of Commerce’s Center for Capital Markets Competitiveness, discusses the economic impact of Senator Warren’s Stop Wall Street Looting Act.

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 Isobel MarkhamAdam LeRod JamesCarmela Mendoza, and Preeti Singh.

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

To find out how, email, or call our team:

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