Are opportunities growing for women in private equity?

Job satisfaction and dreams of entrepreneurship are growing in the sector, suggests a new study

The pandemic has caused more female general partners in private equity to consider starting their own firm, according to a new study.

Investec’s 11th annual GP Trends report reveals “a radical shift in sentiment” among female leaders in the private equity sector, including “increased levels of satisfaction with their careers and newfound ambitions to start their own private equity practices.”

Growing confidence for women in private equity

According to the latest report, 22% of female respondents said that if they left their current firm, they would start their own compared to 16% of male respondents, indicating “a dramatic and significant shift in women’s confidence” private equity sector.

The results are startling considering that in the 2020 report, 0% of women in private equity considering leaving their firm claimed they would like to start their own organisation, down from 2% in 2018.

Another interesting finding is with women and career satisfaction in the private equity sector, where the latest report found that 21% were much more satisfied with their careers versus 19% of men. While the percentage of women being less satisfied with their careers stood at 18% this year, it’s a significant improvement compared to the 21%of women who said they were less satisfied in 2020.

Despite this, male career satisfaction remains higher overall, with cumulative data highlighting that around 52% are at “least somewhat more satisfied with the direction of their career” compared to 42% of women.

Gender and ethnicity pay equality concerns

Concerns around gender pay equality still hold women back, added the study, where 69% of respondents still believe they would be paid more for their job if they were male, a sentiment that was up from 56% in last years’ survey. More striking still, this figure increased to 86% among the small number of BAME female respondents surveyed. This is despite the 73% of women surveyed that agree that their firm considers diversity and equal opportunities to be “key in building a successful business.”

In this regard, ethnicity pay equality was identified as a cause for concern, where 34% of BAME respondents said that they would be paid better if they were white. However, just 18% of those at partner level agreed with this.

While Investec’s survey demonstrates general agreement across all genders and ethnicities that firms consider diversity and equal opportunities to be key in building a successful business, 32% of BAME respondents said they were considering leaving their current firm in the next year compared to 13% of white respondents. Lastly, 25% of female respondents, compared to 16% of men, were also considering leaving.

Helen Lucas, Growth & Acquisition Finance Investec, said: “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.

“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. Still, it is worrying to think that partners believe their career prospects would be better if they were of 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.”
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