More than 400 European asset owners and private equity firms converged on Geneva this week for Invest Europe’s annual Investors’ Forum.
This year’s gathering comes on the back of the hottest fundraising and dealmaking environment on record. Though the mood on the ground remained largely optimistic, that sentiment was tempered with caution as investors brace for soaring inflation, rising interest rates and uncertainty from the war in Ukraine.
It is perhaps unsurprising then that – as one delegate told Private Equity International on the event’s sidelines – investors on a panel closed to media struggled to answer the billion-dollar question: ‘Where does the industry go from here?’
Here are three key takeaways from the event:
The Ukraine crisis may have significant implications for the industry’s approach to environmental, social and governance issues.
“There’s going to be a rethinking of priorities amongst LPs and GPs,” the head of European PE at a global investment firm told PEI, noting that concerns over Europe’s safety could make investors more amenable to industries that were previously deemed taboo from an ESG perspective, such as defence and non-renewable energy.
Balancing ESG considerations with the need to maintain European sovereignty may prove a challenge for investors; one outcome from this event might be a regulatory softening around decarbonisation timelines.
Women need to be seen and heard
At the first in-person iteration of the forum since 2019, diversity was front of mind for many attendees. Speaking to PEI, Claire Roborel de Climens, global head of private and alternative investments at BNP Paribas Wealth Management, estimated that women accounted for one-third of delegates this year.
“It’s not bad – it’s more and more,” she said. “But it’s not 50 percent.”
The issue of diversity now plays a major role in private equity hiring and staff retention, Natalia Ilmark, senior investment manager at Skandia Mutual Life Insurance, noted. “The challenge that some people find is that it’s difficult to find experienced women, but you have to look a bit wider – you have to look at different types of experiences.”
Diversity – or a lack thereof – could make or break a GP relationship. “I would deselect teams that are not diverse,” Ilmark added. “Diverse teams perform better – there is plenty of data that show this.”
As private equity attempts to seduce a broader swathe of investors, education will be the most important consideration for individual investors hoping to participate.
“You really need to make sure that investors understand the asset class and how long you have to stay in the game,” Sofie Kulp-Tåg, senior investment manager at Skandia, told PEI. “The main consideration is the reputation problems if there are too many unsophisticated investors investing, and if they are not able to fund capital calls.”
Education is crucial as, for many investors, private equity processes are completely new to them, added Adam Harrison, chief commercial officer at investment platform Titanbay, noting that there’s previously been no need to make the industry easy for individual investors to access.