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BVCA Friday Focus - Emerging Managers and LPs come together to reflect on current market environment

Publish Date 10 Nov 2023
Categories Private Capital Update (Formerly Friday Focus)
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EVENTS: Emerging Managers and LPs come together to reflect on current market environment

Industry leaders were able to reconnect at two dedicated BVCA forums held on Tuesday at the Belgravia hotel in London, with the Emerging Managers Summit held in the morning, followed by the LP Summit in the afternoon. Both were an opportunity to reflect on the prospects and challenges different areas of the industry are facing.

Fundraising in the current economic environment was top of mind for emerging managers, as well as reflections on how investor expectations can best be managed. The preparation required to fundraise, market, and stand out from the crowd was also central to the morning discussion.

At the LP Summit the annual sentiment survey, which ran in advance of the conference found that the majority of LPs expect the value of their investments in private capital and the number of funds they invest in to remain the same.

The challenging economic environment was again highlighted, with a focus on the impact of macro and geopolitical trends on the LP community and consideration on the impact of this on portfolios and commitments. Ewa Skornas, Research Manager, shares her reflections on the conference in this week’s Insight piece.

The Summit closed with the LP-GP dinner, with special guest Ed Balls in conversation with Michael Moore. The former Labour Cabinet minister, Treasury Chief Economic Adviser, and City Minister shared his view on the future of politics and the economy. He emphasised the importance of private capital investment to economic growth, and implored guests to continue their great work.

Read more

 

INVESTMENT COMPACT: New signatories commit to increasing investment into private capital

The BVCA is proud to announce another 30 signatories to the Venture Capital Investment Compact, which was launched on 24 October. The Compact is a commitment by UK venture capital and growth equity fund managers to develop a long-term and constructive working relationship with pension investors.

It builds on the Chancellor’s Mansion House proposals, which saw 10 of the UK’s largest Defined Contribution pension providers commit to the objective of allocating at least 5% of their default funds to unlisted assets by 2030.

Signatories include venture capital funds such as Atomico, Anthemis, Seedcamp, Ada Ventures and White Star Capital; life sciences focussed funds Monograph and RTW; and growth equity funds Mayfair Equity Partners, ICG, Growth Capital Partners, FPE Capital, Mobeus and True Capital.

This brings the total number of Compact signatories to 50, with a total AUM of over £100bn. There will be further opportunity for venture capital and growth equity firms, which includes mid-market private equity, to sign in the coming weeks. Further details of the expert panel and the other outputs from the VCIC will be announced soon. For further details please contact the BVCA policy team.

 

SUSTAINABILITY: Launch of new roadmap on decarbonising private markets

The ‘Initiative Climate International’ (iCI) and the Sustainable Markets Initiative’s Private Equity Task Force, supported by Bain & Company, has launched the Private Markets Decarbonisation Roadmap (PMDR).

Following a consultation involving over 250 GPs, LPs and others, the Roadmap has been developed to provide private equity firms with guidance on disclosing the evolution of decarbonising their assets and provides insight into how firms can balance emissions-reduction priorities and fiduciary duties.

The PMDR seeks to accelerate the disclosure and reduction of greenhouse gas emissions, providing practical guidance relevant to a fund’s operational characteristics. It also addresses a multi-strategy approach, incorporating advice on the measures stakeholders in different asset classes have available.

 

MP CONNECT: Chi Onwurah visit to The Other Perspective

The BVCA was delighted to facilitate a recent visit for Shadow Science, Research & Innovation Minister, Chi Onwurah MP, to The Other Perspective in Newcastle, which is backed by BVCA member Big Society Capital.

The Other Perspective helps to prepare people for employment through integration and language support, and currently serves as a delivery partner in the North East RISE programme, a refugee support organisation in the North East of England.

Big Society Capital and The Other Perspective explained the benefits of social outcomes partnerships as a new and innovative way to commission public services, and the wider benefits of social impact investment as a way of supporting social sector organisations to deliver impact.

The visit is part of the BVCA’s programme that connects MPs with businesses backed by private capital in their constituencies, helping to bring the industry to life and demonstrate its value to politicians. Please contact the BVCA public affairs team to learn more about the MP Connect programme.

 

RESEARCH: Limited Partner Diversity & Inclusion Survey now open

This week the BVCA opened the data collection for the latest Diversity & Inclusion Survey, this time focused on Limited Partners. The survey will gather data on the representation of women and individuals from diverse ethnic backgrounds within UK Investment teams working in Limited Partner firms.

Suzi Gillespie, BVCA Head of Research, said “Limited Partners play a pivotal role in capital allocation and wield substantial influence across the investment landscape. However, there remains a significant lack of data on the diversity of personnel in private capital teams within LPs which we intend to address with this study.”

The survey is accessible to all LPs with an active private capital allocation programme and a UK office. If your organisation meets these criteria, please click on this link to participate in this important initiative. For any questions, please contact Hind Jbala.

 

Insight

BVCA Insight : Reflections from the BVCA Emerging Managers Summit

Authored by Ewa Skornas, Research Manager, BVCA

As King Charles was delivering his first King’s Speech on Tuesday, outlining the government’s priorities for the year ahead, Limited Partners (LPs) and emerging managers gathered for the BVCA Emerging Managers Summit in London. Ewa Skornas, Research Manager, shares her reflections on the conference.

Read article

 

Media: weekly digest

The BVCA’s External Communications Manager, Karen Keany, looks at this week’s industry coverage:

This week a Daily Mail investigative report revealed that some of the UK’s largest pension funds are investing as little as 0.3 percent into UK companies. The article noted that over the past two decades, the proportion of pension assets invested in UK-listed companies has fallen from 53 per cent in 1997 to just 6 per cent in 2021. Following a request via social media for views on whether the Mansion House reforms could unlock up to £75bn to invest into the UK economy, Josephine Cumbo considers whether the Chancellor can deliver on his pension reforms. The BVCA offered to provide the industry’s point of view but the offer was not taken up. As there are some inaccuracies within the piece, the BVCA comms team will be contacting Josephine to offer another briefing.

The Telegraph meanwhile considers the Prime Minister’s ambition to tackle the UK’s £2.5 trillion pension market and how this could prove to be his legacy

A new report from Phoenix Group and Make My Money Matter features in Pensions Age which claims that the UK pension industry could invest up to £1.2trn in decarbonisation strategies but are being held back due to a number of barriers. These include the scarcity of investable and scalable opportunities as well as regulatory constraints.

The Guardian reports on comments by The National Institute for Economic and Social Research, who said the chancellor should ignore calls by Tory MPs for pre-election tax cuts and focus on measures to boost growth through improvements to transport, digital networks, skills and housing.

The Standard writes that Lobby Group Business Ldn has written to the Transport Secretary to stress that delaying the HS2 tunnel to Euston would only drive-up costs. In the letter, Chief Executive of Business Ldn, John Dickie, wrote, “The private sector can deliver the project efficiently if Government puts in the right commercial framework.”

CityA.M. highlights that new research has revealed that in the UK, all-male-owned venture capital funds collectively raised around 10 times more limited partner capital than all-female-owned funds. The new report also showed that female-owned VC funds raised just 7p in every £1 of the £6.6bn raised, whilst all-male-owned raised 76p.

In the FT former fund manager, Simon Edelstein gives his opinion on why some investment trusts can find themselves trading at a discount.

To learn more about how the BVCA engages with the media, or about any of the above, contact pressoffice@bvca.co.uk.

News

Daily Mail: Is YOUR pension fund turning its back on Britain? View article here
 

Financial Times: Can Jeremy Hunt deliver on his pension reforms? View article here
 

The Telegraph: Why Sunak is gambling on overhauling pensions. View article here
 

Pensions Age Magazine: Pension funds could invest up to £1.2tr to aid net-zero journey. View article here
 

The Standard: London businesses appeal for Euston tunnel despite HS2 troubles. View article here
 

CityAM: All-male venture capital funds raise 10 times more than all-female. View article here
 

Comment

Financial Times: Investment trusts: understanding discounts — friend or foe? View article here

 

Research: weekly digest

Gender disparity in UK VC funding: A 10x divide

In partnership with Diversity VC and support from Google Cloud, Ada Ventures published its Women in UK Venture Capital report, indicating that VC funds owned by men have raised approximately 10x more capital than those owned by women between 2017 and 2023. This disparity is a result of several factors, including the prevalence of men in senior leadership positions and the historical composition of the industry. The report highlights the issue of "diversity washing," where funds may appear gender diverse but not include women in decision-making or ownership of the management company.

This gender imbalance in venture capital has broader consequences for the startup ecosystem, as it affects the funding opportunities for diverse founders. Women-led startups receive less investment and having more women investors in VC firms can lead to more deals for female-led startups.

The report underscores the need for increased transparency from LPs regarding their capital allocations. The report's recommendations include LPs making public commitments to support diverse managers and reporting on gender diversity within VC firms.

 

Private capital at a glance
7p in £1

Of over £6.6bn raised, just 7p in every pound raised goes to all-women-owned management companies.

1 fund

All-woman owned funds raised just 1 fund in the time it takes for all-male owned funds to raise 8.

Source: Women in UK Venture Capital | Ada Ventures Women in UK Venture Capital | Ada Ventures

Learn more on how private capital is making a difference on the BVCA website.

 

Spotlight

BVCA Technical Update and TLR Conference

The BVCA provides monthly Policy & Technical updates to keep members informed of the latest developments affecting our industry. Covering the ongoing work of the BVCA’s technical committees, the updates also include a dedicated section on the latest sustainability developments and an update on current consultations which the Policy team are monitoring with the support from the committees.

An overview of the most important technical developments will also be provided at the BVCA’s upcoming Tax, Legal & Regulatory Conference on 21 November. The one-day event will provide a detailed insight into the technical areas shaping the private capital industry. Delegates will be able to explore the impact of legislation, regulation and taxation in an event delivered by industry practitioners. Further information on the event can be found here.


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