Private markets managers with diverse ownership teams are growing in number and performance, according to research from RCP Advisors in its DEI Research Report: Diversity and Financial Outperformance in Middle Market PE.
RCP, a private markets firm based in Chicago, compiled its research from the group’s in-house private markets database covering 2,900 firms, 5,000 managed funds and 35,000 portfolio companies. The report “hones in on” firms owned and managed by minority groups, women, veterans and disabled individuals.
The strategies of diverse managers roughly mirror the broader private markets landscape, though investments trend toward earlier-stage companies still considered in need of growth capital.
Most importantly, diverse managers are showing their strategies work. Around one-third of firms with a diverse ownership generated net returns of between 10 percent and 15 percent. Diversely managed investments also generated higher EBITDA growth – in the 10 percent to 30 percent measurement category – in comparison with broader private markets investments.