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Private Equity and Value Creation: A Fund Manager’s Guide to Gender-smart Investing

International Finance Corporation CDC Group Plc.

2020

Global

Guide

Impact Investing

Private equity funding Gender-smart investing Guide for fund managers

Private Equity and Value Creation: A Fund Manager’s Guide to Gender-smart Investing

Private Equity and Value Creation: A Fund Manager’s Guide to Gender-smart Investing

The International Finance Corporation (IFC), in partnership with CDC Group Plc. and with support from the Government of Canada, developed Private Equity and Value Creation: A Fund Manager’s Guide to Gender-smart Investing as a practical step-by-step road map for fund managers on how to strengthen gender diversity within their own firms and incorporate a gender focus into investment operations. This publication combines learnings from CDC and IFC ’s experience with over 160 fund managers and draws on best practices with a series of case studies from stakeholders across the industry.

Evidence shows that gender-smart investment strategies can help grow a company’s competitiveness, solidify its supply base, improve its human capital and help build an overall enabling business environment. By considering the full scope of the business case, companies can unlock opportunities for increased profit, growth and innovation. While the opportunity is promising, more clarity and guidance is needed by fund managers to understand how to put gender-smart investing into practice. This publication is intended to fill that knowledge gap, presenting several approaches that can be adopted not just by fund managers but also other private sector investors.

Key Insights

  • The COVID-19 pandemic is increasing the importance for the Private Equity industry to pursue more focused value-creation strategies to help portfolio companies recover with resilience. This includes gender-smart investing, an investment strategy that uses capital to address gender inequalities between women and men.
  • Research shows that volumes of capital raised with a gender lens across private equity, venture capital and private debt quadrupled in the last two years, clearing USD 4.8 billion in 2019, up from USD 1.1B in 2017, and continues to increase.
  • Gender-smart investing both capitalises on new opportunities (e.g., a new consumer market) and manages risks (e.g., gender pay gap inequities and harassment) that can have reputational, operational and ultimately financial implications on investee company performance.
  • Gender-smart investing means moving beyond counting the number of women and men within a business, to identify the behavioral changes needed to address gender gaps.
  • Fund managers can drive the adoption of gender-smart investing both at the firm and portfolio levels.

Highlights

  • Detailed and emerging examples of structural considerations and illustrations of investment structures to support allocating capital with the intention of closing gender gaps. This includes approaches, tools, evidence, best practices and case studies to help fund managers identify and address underlying barriers that cause gender gaps.
  • Practical tools to apply gender-smart investing, including but not limited to:
    (1) a four-action framework for adopting gender lens investing at the firm level,
    (2) five gender-smart investment strategies for fund managers,
    (3) gender-smart investment strategies specific to limited partners, and
    (4) six principles that fund managers can adopt to ensure their exits are aligned with their gender-smart investment strategies, including tips on how to maximise gender outcomes.
  • Recommendations on how to improve current strategies and practices at both the firm and portfolio levels.

Contents

  • Foreword by CDC and IFC
  • Acknowledgments
  • Executive Summary
  • Abbreviations and Acronyms
  • Introduction
    What is Gender-smart investing?
    Objectives, Audience and Methodology
  • The Investor’s Journey
    Getting Started: Set a Focus
    Five Gender-smart Investment Strategies
  • Firm Level
    Strengthen Gender Diversity at the Firm/Fund Manager Level
    Implement a Firm-wide Gender Strategy
    Steps to a Successful Strategy
  • Portfolio Level
    Select A Gender Lens
    Gender-smart Investment Strategies
    Apply a Gender Lens
    Deal Origination
    Due Diligence
    Gender Analysis
    Dual Structure and Terms and Levers
    Measure a Gender Lens
    Portfolio Management
    Portfolio Measurement
    Exits
  • Conclusion
  • Appendices
    A: The Business Case for Closing Gender Gaps
    B: Form Level HR Indicators
    C: Three Steps to Baseline
    D: Deal Level Indicators
    E: Deal Level Benchmarks
    F: Resources on Gender-based Risks
    G: Gender-Smart Investing Tools
    H: Sample Gender Action Plan
    Key Gender Definitions and Terms
    Boxes, Case Studies, Figures and Tables
  • Notes

The Guide was originally published on the IFC website.

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