Private Equity’s Male Bias Proves Hard to Fix, Even in Sweden


In one of the world’s most gender-equal societies, private equity has once again been outed as a surprisingly stubborn bastion of male dominance.

Just 19% of board seats at portfolio companies owned by PE firms are held by women, according to a study by HUI Research commissioned by the Swedish Private Equity & Venture Capital Association published on Thursday. That compares with roughly a third of seats at companies traded on the Nasdaq OMX Stockholm index. The report also cited a “major gender imbalance” when it comes to PE firms’ own investment committees, where only 16% are women.

Private equity has long stood out as one of the most impenetrable areas of finance for women. A 2019 Bloomberg analysis found that they fill only 8% of senior investment roles globally at the 10 largest firms that use debt to buy companies. The lack of diversity may prove increasingly awkward as end-investors such as pension funds demand more social sensitivity from the external managers they hire.

Some PE firms are already reacting. Stockholm-based EQT AB, Europe’s biggest private equity manager, has taken the unusual step of linking a recent bond to specific gender goals. In practice, EQT will pay creditors more if it fails to raise the number of women in its investment team, or if the boards of the companies it owns don’t meet gender diversity goals.

Historically, it’s been difficult to attract and keep women in the industry. Previous studies point to barriers such as unconscious bias from those making appointments, as well as a basic lack of commitment to diversity in private equity. But there are some nascent signs of improvement, according to Monalotte Theorell Christofferson, who chairs the Swedish Private Equity & Venture Capital Association.

“The industry has worked much more actively with this issue in the past few years,” Theorell Christofferson said by phone. “Firms are setting targets for gender representation. There is training on unconscious bias, and the pressure comes both from employees and investors.”

The study, which besides gender diversity also measured the climate impact of Sweden’s private equity industry in 2020, as well as job creation and anti-corruption efforts, showed that female representation in management teams was higher than on boards, at 26%. Theorell Christofferson says it’s just “a matter of time” before investors start to demand industry targets for gender equality.

The research found that in other areas of sustainability besides gender diversity, private equity performs better. It’s on par with public companies when it comes to reducing carbon footprints and even outperforms listed firms when measured on job creation.

Meanwhile, men continue to grab the lion’s share of funding when it comes to venture capital. Theorell Christofferson, who’s also the chief financial officer at Stena Sessan AB, a Swedish investment firm, says that money would probably be distributed more fairly if VC firms brought in more women.

“Decisions are generally better when there are more perspectives,” she said.

©2021 Bloomberg L.P.

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