Will IR pros rule the industry?

Leaders within the more mature mutual-fund market often come from marketing backgrounds.

With fundraising tougher than ever, and the very real possibility that placement agents may not be able to deliver a major type of limited partner – US public pensions – in-house investor relations professionals have taken on greater prominence across the private equity industry.

How high might some of these professionals rise within their firms? A look at a more mature fund-management market offers one answer: to the top.

The US mutual fund market, which has been growing and maturing since the 1960s, includes several very large companies that are led by executives who come from marketing and investor relations backgrounds (see table below). By contrast, almost all private equity firms today are led by deal-oriented founders.

But this divergence may lessen as private equity evolves into an even more client-focused, institutional business. At least one major firm, The Carlyle Group, is co-led by a senior partner who is focused primarily on fundraising and being an “ambassador” for the firm – David Rubenstein.

Even if the fundraising markets return to their former glory, general partners are increasingly taking the view that IR is a continual and crucial function requiring a dedicated internal team. The partner who leads a franchise to its next fund closing is recognised a having saved the franchise from a slow dissolution.

Certainly private equity firms will continue to be led by partners with primarily investment backgrounds, but as the industry matures, its top leadership will need to be more focused on client relations, and it would not be surprising to see certain highly talented, client-focused professionals tapped to manage important private equity franchises in the future.

This trend would be furthered by an increasing distinction between the investment function of a firm, and its executive oversight.

Look who’s leading mutual funds
Some of the largest mutual fund companies in the world are led by executives with marketing and client-relations backgrounds

Mutual Fund Company

Top Executive

Background

Vanguard

CEO William McNabb

Former MD of client-relations group

Fidelity

President Rodger Lawson

Former Prudential Exec VP, global marketing communications

OppenheimerFunds

CEO Bill Gavin

25 years experience in sales, marketing and operations management”

Janus Funds

President Robin Beery

Also is Chief Marketing Officer

Van Kampen

President, CEO Jerry Miller

Was head of sales, marketing and key account coverage activities at Merrill Lynch

John Hancock Funds

President, CEO Keith Hartstein

Was Exec VP of retail sales and marketing

Source: Private Equity Manager