Diversity, Equity, and Inclusion (“DEI”) Research Report: Diversity and Financial Outperformance in Middle Market PE
RCP’s Research Finds Diverse Managers Have Historically Generated Attractive Adjusted Risk / Return Profiles Within Middle Market Private Equity
RCP Advisors (“RCP”) is proud to share its latest research presentation: “Diversity, Equity, and Inclusion (“DEI”) Research Report: Diversity and Financial Outperformance In Middle Market PE.”
Leveraging a decade of Middle Market Private Equity investment data along with its proprietary diversity tracking process, RCP is able to provide insights regarding the ways in which diversity translates to financial performance within the middle market private equity landscape.
The first half of the report compiles key takeaways from a multitude of DEI-focused research, highlighting private equity financial outperformance, and explains potential reasonings why Diverse Managers have historically achieved superior returns. The second half of the report uses GPScout, RCP’s proprietary database, to confirm that Diverse Managers in the Middle Market have a higher propensity to generate returns that meet or exceed the Broader Market, often doing so with less downside dispersion. It also dives into various characteristics of Diverse Managers and the performance of underlying deals owned by Diverse Funds.
- Pool of private equity funds led by Diverse Managers has increased dramatically over the past decade (pg. 27)
- Almost one-third of Diverse Managers are top-rated in GPScout (rated A or B quality) (pg. 28)
- Diverse Funds possess attractive risk / return profiles, including better downside risk compared to the Broader Market with similar upside potential (pg. 32)
- Companies owned by Diverse Managers grow faster on both a revenue and EBITDA-basis as compared to the Broader Market (pg. 34-35)
RCP believes that DEI-focused investing is a crucial step towards elevating private equity to a more inclusive and equitable industry; this, in turn, will have a far-reaching ripple effect that benefits our communities and society.
“We are encouraged by this research — not only is DEI investing the right thing to do, but it is also a prudent decision and deserves allocation in all investment portfolios,” said Mary Hunt, Portfolio Manager of RCP’s DEI-focused strategy.
For additional details, as well as conclusions and key takeaways from our research, please download the report below.