ESG: How Genstar does it

GenStar’s CFO talks ESG; LPs are getting nervous about megafunds’ returns.

Today, we continue our focus on environmental, social and governance issues with an interview with GenStar’s CFO, Melissa Dickerson, on the firm’s approach to integrating ESG into the investment process. Dickerson tells Brian Bonilla what investors are looking for in terms of ESG reporting, what it’s like working with a sustainability consultant to implement an ESG program, and why having the CCO in charge of the program has been a successful strategy for the mid-market firm.

LPs are getting worried about megafund returns. Private Equity International’s Rod James spoke to several LPs on the sidelines of the SuperInvestor conference in Amsterdam last week, who told him they’re getting increasingly concerned about returns from the big buyout funds. High valuations on entry, a lack of large, high-quality targets and heavy fees are causing them to look more at VC and small-cap opportunities. That chimes with what managing partners from Riverside told press at their breakfast meeting last Wednesday.

Yes, Riverside’s focus is already on small and mid-market acquisitions, but in combination with where we are in the cycle, it makes sense that more LPs would be looking to GPs that invest in small and mid-market deals — in Riverside co-CEO Stewart Kohl’s words, “small companies in industries at an inflection point.”

Email prepared by Graham Bippart