Prudential invests $200m to boost diversity, equity and inclusion in private equity

Prudential Financial has announced a $200 million commitment in private equity investments, which are constructed with a diversity, equity and inclusion (DEI) lens.

The new Prudential DEI Portfolio will invest in early-stage private equity firms with diverse ownership. Investments will focus on limited partner stakes with substantial ownership and/or management by women and minorities; particularly those raising capital for first or second funds.

Within private equity, structural barriers are preventing women-led and diverse teams from raising sufficient capital in support of their first funds. Only 1.3% of the investment industry’s $69 trillion in assets under management are managed by women or people of colour, highlighted Prudential. This is despite the fact that, gender-diverse fund management teams deliver an incremental 10%-20% in returns, compared to non-gender-diverse teams, according to the International Finance Corporation.

PROVIDING EQUITY OF OPPORTUNITY

“Our goal in managing the DEI Portfolio is to provide equity of opportunity for segments that often face challenges in the fundraising process; while also maintaining the rigorous investment standards we’re known for,” stated Cherrise Cederqvist, Vice President at PGIM Investments, leading the DEI Portfolio programme. “Ultimately, we expect the investments made through the DEI Portfolio to result in greater representation; and increased assets under management for women and minority-owned investment firms over time.”

The DEI Portfolio Investment Steering Committee, led by a diverse group of executives across Prudential and its global asset management business, PGIM Inc, will govern future investments; and evaluate funds based on specific factors. These include diversity of fund management ownership; diversity of the portfolio management team; and impact of the investment strategy on diverse populations.

GROWING WOMEN & MINORITY MANAGERS

Providing capital to early-stage managers complements Prudential’s existing investments in later-stage alternative asset firms owned and operated by women and minorities. The company currently oversees nearly $1.2 billion in AUM invested in well-established private equity funds, hedge funds and real estate funds, whose management teams have a substantial or majority ownership by an ethnic minority or woman.

“We are committed to meaningfully developing and growing women and minority managers; by ensuring the selection process is equitable and inclusive across the full spectrum of early and late stage funds,” added Lata Reddy, Senior Vice President for Prudential’s Inclusive Solutions organisation. “By providing intellectual and financial capital, and by serving as an advocate for this segment, we are seeking to break down the structural barriers that prevent diverse-led teams from raising capital.”

Goldman Sachs Asset Management and the National Association of Investment Companies, recently joined forces to improve diversity in the alternative investment industry, and foster growth of the next generation of diverse investment managers. Click here to read more.