The pandemic has revealed a radical shift in sentiment among female general partners in private equity, who are now showing increased levels of satisfaction with their careers and newfound ambitions to start their own private equity practices, according to Investec’s 11th annual GP Trends report.
In the 2020 report, 0 per cent of women in private equity that were considering leaving their current firm claimed they would like to start their own firm, down from just 2 per cent, in 2018. Now, over one in five (22 per cent) of female respondents say that, if they left their current firm, they would start their own (vs. 16 per cent of male respondents). This indicates a dramatic and significant shift in women’s confidence in the private equity sector.
Investec’s Helen Lucas commented:
“Everyone who starts their own firm does so for their own reasons and these reasons will often be deeply personal. But this increase in the number of women looking to found their own GP is encouraging on two fronts. Firstly, it identifies the industry as one where a female entrepreneur feels that they can be successful. Secondly, it starts to redress the gender imbalance at the top of private equity firms.”
Career satisfaction among female general partners has also improved. One in five (21 per cent) of women report being much more satisfied with their career (vs. 19 per cent of men), with 18 per cent saying they were less satisfied. This compares to 21 per cent of women who previously said they were less satisfied (vs. 10 per cent of males), in 2020. However, male career satisfaction continues to be higher, overall, with cumulative data highlighting that over half (52 per cent) are at least somewhat more satisfied with the direction of their career, compared to 42 per cent of women. Likewise, just 2 per cent of men are much less satisfied.
While lockdown has given women in private equity time to reflect upon their career opportunities, gender pay inequality still remains a core concern.
Despite a positive shift in overall sentiment from women in private equity, general partners still express concerns around gender pay equality. Over two thirds (69 per cent) of respondents still believe they would be paid more for their job if they were male – up from 56 per cent in last years’ survey. The figures increase to 86 per cent among the small number of BAME female respondents surveyed. This is despite almost three-quarters (73 per cent) of women surveyed agreeing that their firm considers diversity and equal opportunities to be key in building a successful business.
Ethnicity pay equality was also identified among respondents as a cause for concern, as over a third of BAME respondents (34%) believe that they would be paid better if they were white. While just 18 per cent of those at Partner level agreed with this, 45 per cent of those at Managing Partner level or equivalent and 44 per cent of those in roles below partner level see their ethnicity as a contributing factor to their pay.
Looking further into sentiment surrounding diversity and equality opportunities at private equity firms, Investec’s survey demonstrates overall agreement, across all genders and ethnicities, that firms consider diversity and equal opportunities to be key in building a successful business, with longevity. Nevertheless, 32 per cent of BAME respondents are considering leaving their current firm in the next 12 months, compared to 13% of white respondents. 25% of female respondents (compared to 16% of men) are also considering leaving.
Although private equity firms are clearly working to improve gender and diversity inequalities in their practices, it’s clear that more needs to be done to evidence this, in order to improve retention of BAME and female team members.
Helen Lucas continues:
“It’s encouraging to see that sentiment has improved among female partners despite a challenging 2020 with the pandemic. The fact that there are significantly more female partners wanting to start their own private equity practice is an exciting shift for the industry, and I hope this means we will begin to see more inspiring female-led firms.
However, while there have been steady improvements in some areas, it is clear that pay equality is still an area of significant concern from both a gender and ethnicity perspective. It is understandable that change isn’t something that will happen overnight in such an established industry, but it is worrying to think that partners believe their career prospects would be better if they were a different gender or race. Having transparency around the gender pay gap is still an important way to help tackle this challenge, but true change will come from building a more diverse leadership in the private equity industry, overall”