PE and diversity: Reaching out

As part of its efforts to promote diversity within the private equity industry, the Australian Investment Council (AIC) has trialed university outreach. Asked to name the most common misperception he faced when reaching out to students, Yasser Al-Ansary, the organization’s CEO, claims there is a knowledge gap as to what private capital is. 

“There are perceptions built around what they have read in the media or heard second or third-hand from someone else. Rarely have they had firsthand exposure to private equity managers,” he says. “As an industry, we haven’t done a particularly good job of explaining the asset class to students. We haven’t taken the time to do it, but we are trying to address that now.”

The lack of diversity in Asia’s PE firms – especially in terms of gender – is often linked to the traditional industry recruiting channels. There is a tendency to fill investment professional roles with people from investment banks and the relatively low level of female representation in financial services has a knock-on effect in private equity. As more women move through the ranks at investment banks, this effect may dissipate, although whether GPs can hold on to this talent is another matter entirely.

A more immediate question is what more could be done to attract women into private equity, now that private equity firms openly acknowledge that diversity aids decision-making and some are taking material steps to address their imbalances. Should they be going into classrooms to confound preconceived notions about the asset class and sell it as a fulfilling, long-term career option for all-comers?

AIC has tried engaging with business school students. While there is likely to be a reasonable understanding of private equity at this level, it doesn’t mean outreach is unwarranted. One of the problems is that some women self-select themselves out of careers in financial services before they start because they don’t believe it is conducive to family life. A Hong Kong-based PE executive observes that this led many of her female business school classmates to opt for marketing rather than finance. 

Al-Ansary believes the industry should target undergraduates as well – even though few private equity firms recruit graduates in any meaningful way. “It’s at this point in their skills building phase that they might make decisions about the career options they want to pursue. Being absent at the point when those discussions occur could present a longer-term problem for the industry,” he says. “We might be behind the game when it comes to pursuing those candidates further down the track.”

This approach is welcomed by some (“Private equity is not a known career path within universities”) and receives a lukewarm response from others (“I’m not sure it makes much difference because the path is shaped by your early jobs – a lot of education happens in those first two positions after university”). Still more believe the problems come later in the process when recruiters – or even private equity firms – emphasize the pressure-cooker atmosphere and put some potential candidates off.

While GPs can alter their styles of engagement or issue specific instructions to recruitment agencies, few have the resources or the will to do campus outreach. Perhaps this role does fall to industry associations, although AIC remains an outlier in Asia in terms of funding structure and internal set-up. 

As with most diversity initiatives, top-level buy-in is required to make things happen. If private equity firms do not want to engage with students formally and directly, they should encourage investment professionals to do so individually through channels such as alumni networks – taking into the classroom the role model approach that has proved effective within the industry. Internship programs that have diversity criteria would also help. 

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• Topics
• GPs
• Asia
• ESG