Gender-inclusive management teams bolster PE returns

The research suggests that diversity contributes to better performance, measured as Peracs Alpha, total value to paid-in (TVPI), and internal rate of return (IRR). The diverse gender investment committees that were studied generated better results compared to all-male committees by 7% in alpha, 0.52% in TVPI, and 12% in IRR.

Women tend to lead more buyout deals in biotechnology and IT, according to the data, and less deals in industrials, business services, and technolgy, media and telecommunications industries. The data also found that women held deals for longer.

The research suggests that diverse investment committees produce a failure rate that is 8% lower, compared to all-male committees, resulting in a reduction of capital loss.

The research simulated investment committees (simIC) by looking at deal leaders over a given period. For example, if two deals were led by a man and one by a woman in a given year, the simIC for that year would be two men and one woman. It looked at audited performance data on 2,454 buyout deals completed, by 51 GPs within 220 funds focused on investments in North America and Europe.

The research can be found here.

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• Performance
• Fund performance
• ESG