After nearly two years, Super Return International finally re-emerged in Berlin, Germany last week.
Typically held in-person, the annual conference is one of the most well-attended events for the private equity industry. As Bloomberg’s Jan-Henrik Foerster and Benjamin Robertson so aptly put it in their recent write up, Super Return Berlin is perhaps “the mother of all speed-dating events in financial services.” General Partners (GP) hit the ground with a full slate of Limited Partner LP) meetings and the senior-most executives took the main stage to promote their respective views of the investment landscape.
For many in attendance, it was their first in-person conference since the onset of the pandemic and the thrill of time-off-video conferences was evident. In case you were unable to make the trip, here are a few of the key takeaways:
No longer siloed, ESG and Impact dominated the conversation
While certain panel conversations were dedicated to ESG and Impact, these topics consistently came up throughout the day—with speakers attuned to the broader expectations they face as investors. Panelists discussed bringing intentionality to DEI, the importance of measurement, and the challenges around standardizing impact. Speakers seemed to generally eschew the notion of “productizing ESG” in favor of embedding this process throughout the investment process, and with every transaction.
“Every deal is a tech deal”
Executives spoke to the transformational role of technology—across the economy, companies in which they invest, and their own operations. Will technology unleash a higher rate of productivity for the economy than was possible pre-pandemic? What will be the new equilibrium for hybrid employees? While panelists might have had slightly diverging views on these types of questions, the consensus was clearly that firms need to embrace digitization. One panelist declared the next, hottest trend in private equity could be the intersection of digitization and sustainability.
Pressure is on to justify high valuations and better explain performance
With valuations sky high, panelists discussed the need to generate growth that justifies the premiums being paid for companies. To drive returns in this environment, executives emphasized the importance of finding companies where there is strong potential to improve business models and profitability.
In another conversation, speakers also emphasized that the industry should improve how it explains performance. How much risk went into generating a given unit of return? What led to the value creation? How repeatable is that process? Panelists argued that industry standards in these areas would help investors better understand performance.
The industry can do more work to bolster reputation
Pointing to the media controversy that has surrounded certain industry practices and deals, panelists spoke to the disconnect between external perception and private equity’s actual value-add. One speaker emphasized the importance of better showcasing the role the industry plays in job creation. Edelman’s 2021 LP Survey on Private Equity Reputation, which was released during the conference, underscores the role of non-financial measures in improving reputation with LPs and attracting capital commitments. For example, the survey found 1 in 3 LPs say ESG factors, such as employee welfare policies and DEI practices, are as or more important than investment returns when deciding which PE firms to commit capital to.
Lisa Leiter is an Executive Vice President and Tim Quinn is a Senior Vice President in our Financial Communications & Capital Markets practice.