What LPs expect from their GPs amid covid-19

Eight things private equity managers and their portfolio companies should do to limit impact from the coronavirus, according to the Netherlands' Achmea Investment Management.

As the coronavirus pandemic ravages its way across Europe and North America, investors are bracing for the human and economic impact the outbreak is having.

For Dutch investment firm Achmea Investment Management, which manages over €129 billion of client assets, it expects its GPs and their portfolio companies to take all necessary defensive measures in the wake of covid-19.

“The well-being of the private equity firm’s staff and the staff of its portfolio companies is paramount. The strong and intensive work, together with management of the companies, and to support them is key [for us] during this period,” Jos van Gisbergen, senior portfolio manager at Achmea, told Private Equity International.

The investor has backed funds managed by LeapFrog Investments and Life Sciences Partners, according to PEI data.

Private equity firms and their portfolio companies should have prepared a summary of measures for each of the geographies they invest in, van Gisbergen noted. These include:

  • Where possible, activate smart working
  • Holiday leave with as many employees as possible
  • Where necessary, rent new spaces or use idle office space to reorganise entire offices to guarantee maximum distance between employees
  • Ensure that common areas (canteens) are used by a limited amount of people and respect minimum proximity to their colleagues
  • Organise health checks for people returning from other affected countries and apply quarantine measures if necessary
  • Ensure that employees that need to travel to commission/install products/machines/equipment because operations are non-deferrable are “clear teams”, ie they have gone through a quarantine
  • Put in place procedures in case any employee has sign of illness
  • Restrict all meetings at company premises to business-critical meetings only. Visitors are admitted only after showing no signs of illness and completing a questionnaire examining their potential exposure to the virus

The covid-19 pandemic has already disrupted how the private equity industry operates, with investors such as the California Public Employees’ Retirement System closing its Sacramento headquarters for one day after an employee showed symptoms of the virus, and the Louisiana State Employees’ Retirement System temporarily closing its building to visitors.

“This virus is setting the clock several years back on value creation, as we have witnessed during the great financial crisis,” van Gisbergen added.

Check out all our coverage on how covid-19 is affecting the private equity industry here.

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