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Women in private equity

New research commissioned by Level 20 finds that women now entering private equity usually come from banking and consulting, while more senior women came from diverse sectors.

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Banking and strategic consulting backgrounds are the most common feeder industries for women now entering private equity, while more senior women came from diverse backgrounds, reveals a new study commissioned by Level 20, the not-for-profit body established to inspire women to join and succeed in the private equity industry.

Significantly more women in junior investment roles in private equity have joined the industry from banking or consulting compared with their more senior female colleagues. Almost 40 per cent of women in senior investment roles entered private equity from a range of backgrounds including consumer industries, engineering, healthcare and law.

“These findings suggest that there has been in the past decade or two a narrowing of the routes to entry to private equity for women, and this risks sharpening the industry’s gender divide,” says Level 20.

The research, conducted by a team from the Wo+Men’s Leadership Centre at Cambridge Judge Business School, University of Cambridge, led by Director of the Centre, Professor Sucheta Nadkarni, is the first ever in-depth study of the career paths and personality traits of professionals working in European private equity.

Its findings are based on the responses of more than 700 men and women working in private equity to questions regarding their educational background, career trajectory, personal circumstances and psychological profile. The team used the data to assess key differences between the genders at varying levels of seniority in the private equity industry.

Further key findings from the Cambridge Judge Business School research include:

  • Senior women in large private equity houses have worked at more firms in their careers than men, although moves between firms remain infrequent overall.
  • Significantly more women in senior investment roles are single, have partners in full-time employment and have fewer children than their male counterparts, with the gender difference in single status more pronounced at smaller firms. These differences disappear for women in junior roles.
  • There were no gender differences in the “psychological profile” and educational qualifications of investment professionals. There appears to be a private equity ‘type’ that transcends gender – attributes include being resilient and co-operative, and having the ability to find a balance between making gains and avoiding losses when making investment decisions.

Following publication of these findings, Level 20 will closely examine the findings before embarking on a series of initiatives designed to address the issues thrown up by the research.

Jeryl Andrew, Chief Executive of Level 20, commented:

“We are delighted that so many people in the private equity industry took the time to complete this extensive survey, the findings of which will be invaluable as we continue to try to meet our goal of ensuring greater numbers of women join and succeed in the industry. In particular, the research suggests that the range of professions developing people who move into private equity is narrowing and, if we are to combat a lack of gender diversity, this is something that needs to change.”

Professor Sucheta Nadkarni, Director of the Wo+Men’s Leadership Centre said:

“We are delighted to collaborate with Level 20 for this important and much-needed research in private equity. The research finds no gender difference in psychological profile and educational qualifications of investment professionals. Women are often considered to be held back in certain professions by tendencies such as lack of assertiveness or excessive agreeableness, but these findings show that these excuses simply don’t apply to private equity and that other factors such as family circumstances instead account for gender differences.”