It’s also possible that the beneficial qualities some feel women bring to private equity are, somewhat paradoxically, holding them back from being valued within the asset class.

Being perceived as particularly conscious of risk is perhaps not always an advantage in an industry that relies on taking measured risks for return. Meanwhile, says Gail McManus, managing partner and founder of Private Equity Recruitment, an assumption that women have good people skills can lead them into roles away from investment decisions, which is possibly behind the discrepancy in the Coller Capital survey which seems to indicate that women are felt to contribute in certain areas but not directly to returns.

Particular characteristics of businesses in the private equity industry may also be having an impact. “Private equity is still quite a young and immature industry,” says Stone. “It’s also a small industry so no one firm is hiring lots of people. A lot of firms are still founder-led and founder-managed. From an HR point of view, that may mean they’re less sophisticated.”

There are some signs of change. According to Preqin, the proportion of female senior employees at European private equity firms rose by 2.7 per cent this year, and there are a growing number of initiatives for women in the industry. It’s also encouraging that private equity is recruiting more junior women, points out McManus, even though the industry has yet to put women into senior roles in significant numbers.

Because of this current lack of women in senior roles, the nature of the impact they could have on the industry is yet to be fully understood. But there is a case for saying that private equity, which prides itself on using change to create value and, now more than ever, is in need of new ways to drive returns, should see fostering a more significant female presence as an opportunity worth much greater consideration.

glance around the room at any industry event confirms one of private equity’s open secrets – the proportion of women, particularly in its upper ranks, is extremely low. Without question, you’re likely to see far more Stephens and Pauls than Dianes or Claires. “An astonishing number of firms,” it seems to HgCapital partner Lisa Stone, “have no senior women.”

A host of damning statistics back up these informal observations. According to Preqin, an average of just 12.4 per cent of senior employees at European private equity firms are female. What’s also striking is an apparent relative lack of concern in private equity about figures like these, certainly in the context of the support for female advancement in adjacent industries such as banking and professional services, and the lively debate there has been in recent years about women’s representation on boards and in the business world in general.

“I’m not sure the industry’s stopped to think about it,” says Rhonda Ryan, partner and head of EMEA investments at Altius Associates. “There are companies to invest in, companies to exit, companies to turn around, so having the issue right at the top of the agenda is pretty unlikely.”

But returns from these traditional investment activities are falling. According to a 2014 academic paper by Benjamin Puche, the average return on a buyout fell from 4.3x to 2.8x between 1984 and 2013, a decline of more than 35 per cent. Obviously there are many complex factors behind this fall, but it’s interesting to ask if improving the asset class’s poor gender statistics could help reverse its fortunes.

A recent survey from Coller Capital suggests private equity probably shouldn’t bother doing so: 88 per cent of LPs questioned said that having a higher proportion of women in senior roles at private equity firms would have little direct impact on investment returns.

But some commentators and industry insiders take a different view, arguing that having more senior women would bring specific advantages over and above those that any experienced private equity professional might bring to a firm. Recent academic studies (see box) have claimed to show that businesses with greater diversity perform better, and there is no reason to think that this should not apply to buyouts.

“Diversity is a good thing,” says Natalie Tydeman, senior partner at GMT Communications Partners. “If you have a firm of alpha male, sporting, Oxbridge, public school English individuals you’re less likely to have a diversity of perspectives and styles, and it’s impossible for me to conceive that it wouldn’t be positive to have these.”

It’s also feasible to argue that private equity firms would benefit from the involvement of more women in particular. Women control the majority of consumer decisions – a 2007 McKinsey report found that they were behind 70 per cent of household purchases in Europe – and consumer goods remain a private equity favourite.

Stone thinks there are clear advantages to having women involved with a portfolio company targeting female customers or clients. “If you’re selling products to women, to have women as part of a team of people who are engaged with that business can only be a positive thing,” she says.

Tydeman thinks that women can add value in private equity through particular personal qualities. “There can be a different dynamic around conflicts when you have a mixed group of people rather than just men,” she says. Danielle Candfield, part of the clients services team at HgCapital, makes a related point: “Women influence through consensus, which can take longer, but might be more effective.” Ryan adds risk management to the mix, saying that she thinks women’s appetite for risk tends to be lower, “so you get more balanced investment decisions when you have men and women”.

It seems the industry agrees with these impressions. In the Coller Capital survey, significant proportions of LP respondents who thought that having a “gender-diverse” team would be advantageous overall said it would be specifically beneficial in terms of team quality (73 per cent), team dynamics (68 per cent) and investor relations (41 per cent), and also risk management (39 per cent) and governance (42 per cent).

Yet despite these strong arguments for having more women in the senior ranks of the industry, their numbers remain low. One possible explanation is that women’s current scarcity means that there is not enough statistical evidence of their positive impact to inspire firms to change, or enough cultural understanding within them of the benefits women could bring. “It’s a vicious circle,” says Stone. “Until you start to get some appreciation of what you’re missing, you don’t really know what you’re missing.”

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WOMEN IN PRIVATE EQUITY FEATURES FEATURES WOMEN IN PRIVATE EQUITY

MISSING A TRICK

Debates around tokenism aside, private equity could benefit economically from having more women in senior roles.

Words: Hannah Langworth

THE ACADEMIC PERSPECTIVE A vast range of studies have found that businesses with

more diverse workforces perform better. However, there has been little research specifically relating to women in the

private equity industry. Professor Francesca Cornelli, head of the finance department at London Business School and director

of the Coller Institute of Private Equity, gives an academic perspective on the issue.

What academic evidence is there that diversity improves business performance?

I know the academic literature on boards well, and many claim that more diverse boards perform better. I’m not saying I

don’t believe them, but it’s not enough to say organisations with more women perform better. Maybe the fact that they perform better is why they have more women – they may have a smart

chief executive who appreciates what senior women can contribute, while another might have a chief executive who isn’t very good at his job and dislikes women. We need to show that

adding diversity causes better performance. I hope we’ll eventually find the right data set and the right method.

Is there anything to suggest that a higher proportion of senior women improves performance at private equity firms?

It would be extremely interesting to look at the impact of women in private equity, but the problem is finding the data.

When you have very few women in an industry, it’s very difficult to do a study because nothing will be statistically significant.

Another interesting point for private equity related to this issue is that until you exit a deal, you don’t have hard

information on how good it is. What if an exit takes five years, and a woman involved has taken a career break in the

meantime? Timelines in private equity can be too long for women to prove themselves.

What factors have been proven by academics to improve performance at private equity firms?

It’s hard to say because there isn’t much research, but I recently wrote a paper that showed that higher turnover predicts better future performance. You could see a private equity firm adapting, being flexible, and not being stuck with a certain

type of person who has succeeded there until now as gender-related. If you hold on to an existing team, there are likely to be

no women. If you try new people, you might have women.