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Welcome to today's Leadership in Extraordinary
Times event from Oxford University's Saïd

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Business School; wherever in the world you are,
thank you for joining us. I'm Ludovic Phalippou,

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and I'm a Professor of Financial Economics at
Oxford's Saïd Business School. Our guest today is

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Vindi Banga, who's a partner at the well-known
private equity firm called Clayton, Dubilier

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and Rice, and with him I'll be talking about the
impact of private equity ownership on companies,

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which is a hot topic, with a focus on what happened
during the Covid pandemic - which is yet a hotter

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topic. We want this to be an interactive session
so to get involved in the discussion, please ask

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your questions via the chat box on whichever
platform you're watching on - whether it's

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Linkedin, Facebook or YouTube. Keep your questions
brief because we need to have time to read them

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and make sure you tell us both who you are and
where you are when you are asking a question. So

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Vindi, thank you so much for joining us today
and maybe we could start with what 

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and so to think first about what private
equity firms did well during the COVID crisis,

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and in particular focusing on what was unique to
private equity in these actions. Thank you Ludo,

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it's a pleasure to be with you and everybody else
today. What did private equity firms do well

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during the Covid crisis? Ludo, I think I would
like to answer this really from the perspective

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of my own experience as an operating partner
in my firm; it's hard to speak for the industry.

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I must say nobody could have anticipated the
kind of challenges we have all collectively seen

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in the business world in the last 12 months, I have
to say that all credit to our leadership teams

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that most of our portfolio companies - and we have
about 35 - grew earnings in 2020 over the prior year

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2019 and more than half actually achieved their
original annual budget. Now, how did they do this?

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How did this happen? I think there are a bunch
of reasons for that. I think the first and most

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important thing is that we entered the crisis with
what I would describe as a good quality portfolio.

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We only invest in businesses that are either
number one or number two in their chosen area

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of market segment or opportunity; secondly
we typically back strong leadership teams

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and wherever we feel the leadership,
for whatever reason, needs to be strengthened

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then we try and do that very early in the
investment phase itself. Now what did these

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teams actually do through this Covid crisis? I
think the first priority in the first few weeks

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was to ensure safety and liquidity: safety for
all our employees and customers and consumers,

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this was paramount. How do you run your factories
safely? You have to think very hard about those

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sorts of things. How do you organise shifts,
how do you make sure your workers are safe?

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In terms of retail businesses wherever they
were open, how do you keep your customers as

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safe as possible? so safety was a very important
aspect. But any business did that too,

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right, so what was unique, was there something
unique to private equity in the ability to 

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to keep people safe? No, I don't think so. I
think every responsible business probably did that,

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Okay. Liquidity was another aspect that we looked
at very early on, we had to make sure we have

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enough cash to actually see through the crisis. So
we looked away at all our companies and said 

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can we look through the next 12 to 24 months, can
we make sure we pay the rent, we pay the salaries

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etc. In some cases we had to mothball some parts of
companies, stop some companies and all of that so

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we did that. Sorry on this one, so again I'm trying
to see what is unique to private equity. So would

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you say that in a private equity setting usually
people are more proactive in terms of planning,

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they are more used to looking at cash management
than other companies, maybe because they are

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used to operating under high leverage and so the
cash management is kind of a well-oiled function

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which may not be the case in other companies, or
was it just normal like

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all the businesses looked at whether they could
play rent? Right, I think with private equity I

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would say one thing, that there's a lot of
focus on cash. I mean that is absolutely critical.

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Every time we make an investment we are very
very thoughtful about our cash flow, our cash

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analysis and so on, there's a very good amount
of focus on on cash which perhaps exists in

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the best of public companies but certainly not
in all the public companies that I'm aware of.

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So the second thing I'd say is
within a few months, a couple of months,

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all the operating skills come into play in
private equity and we move very quickly to take

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cost reduction. Now some of this cost reduction
is stuff that was temporary, some of it is more

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structural and actually will stay right through
the crisis and is giving us much higher operating

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leverage. Today I think we move very quickly to
adopt new technologies to create efficiencies,

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either in the supply chain or in terms of customer
acquisition, all of that. At the same time we were

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very focused on growth, how are we going to
restart our businesses where we close them,

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how quickly can you get back into gear, how can
you innovate to meet the needs of let's say

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COVID. For example we had a pizza business
which very quickly pivoted into kerbside

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activities; if you can't open your store and you
can't have people come in then can you serve them

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at the kerb, I think is really important and
that is one factor which probably distinguishes

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 most private equity firms and certainly in
our firm I find felt that our people moved with

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extraordinary speed. And what why do you think it
is that other businesses do not have this kind of

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sense of urgency or speed of execution and 
because whenever, like as you speak now,

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it sounds to me just like normal
management, like proper management, what

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management should be and so I'm perhaps
more puzzled by the fact that the other people

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don't do that right or non-practically don't
do that. I think, Ludo, one of the things that I've

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seen is that in private equity when you make an
investment you have a defined period of about

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five or six years in which you have to deliver
a significant step change in value creation,

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so you're very focused on time, there is a lot of
focus on speed of action and time; you can't lose

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any time because if you lose it then you've
lost a big chunk out of that five/six years,

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so I think certainly speed; I would say private
equity firms tend to move with greater speed.

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A second factor that facilitates that is that
either you have one shareholder or a handful

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of shareholders and therefore when you want
to take swift change action you can usually

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align very quickly around the course of action
and then focus on implementing. That's right.

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One other thing I'd say that we did at that
time is we began to focus quickly on acquisition

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opportunities. Now we have strong balance sheets
for most of our companies, we have capital

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and at a time like this it's really important
to double down and see how you can emerge

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from the crisis much stronger, and therefore
several follow-on investments last year itself.

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I was going to bring this up because another
advantage that people usually think is unique

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to private equity is the access to the capital
market, access to cash, so when there is a

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crisis like it was in 2008 private equity has
usually have a lot of lines of credits

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put on business that they can draw upon in case
there is a problem and here there was a problem

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and they have their own funds they can draw
from their limited partners pretty quickly and

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so they can easily acquire some of the businesses.
So would you say that there were

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some opportunistic acquisitions during the crisis?
When you gave the example of your pizza shop,

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you could have acquired quite a few pizzerias
during the crisis because a number of them were

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struggling hard but I didn't see that many,
you know, strategic or opportunistic acquisitions

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during the crisis of competitors by private equity-owned
businesses but have you seen some? Well actually 

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I'll tell you that and I'll dimensionalise it this
way: prior to the crisis we were investing about

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two billion dollars a year on average out of a
10 billion dollar fund; in the last year we have

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- 12 months from now since March 20 - we have
invested five and a half billion dollars.

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Okay so yeah accelerated your drawdowns pretty
quickly, really accelerated and that's because when

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there is dislocation of the scale that there was
in the whole environment, business environment,

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businesses come under challenge and our
job is we can actually provide solution capital,

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as you were saying people need capital, we can
provide solution capital but we do more than that

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because we bring with that solution capital
operating capability and operating experience, so

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I'll give you three different types of examples of
new investments that we made in the last 12 months.

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The first was a set of firms needing
liquidity. So we own a leading

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furniture retailer in France called But, 
there was another furniture ...

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- I know them well, I know
them very well, I bought stuff there -

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Oh really? Well good, I'm glad with that. Now
there's another furniture retailer in France,

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Conforama, which is part of the Steinhoff group
I am interested in why they were not

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merged together - these two guys - but
there we are so we stepped in, this business was

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going into administration and we've actually
acquired Conforama. We know the industry well,

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we see an opportunity not just to place
our capital but actually an opportunity to

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improve its operating margin, in particular through
improving the supply chain so that's one example.

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Well so I may take you on on this one
to do like a special session on But and Conforama

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because I would be very very curious to see how
they could compete ever against IKEA, that would be

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like, we would need a special session on that one.
I'm happy to do that, actually, I find that 

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But is a fascinating company and it's doing
very well actually in the period that we've been

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associated with it. If we give you another example,
there was a food service business in Florida which

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was facing a liquidity challenge during the first
lockdown. They had high leverage - they had

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liquidity issues - we understand the food service
industry very well, we've invested in it for years

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so we knew the industry is going to come
back and therefore we were able to invest

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with a convertible preferred security and sure
enough the business is doing very well right now.

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So solving the liquidity question for companies
was one source of opportunity. Another source was

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companies looking for transformational growth
and looking for either capital or partners to

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help them, and here again I can give you a
couple of examples. We invested in a pharmaceutical

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services platform called Huntsworth - this is
a company that helps commercialise new drugs -

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and we've been able to inject capital but actually
add growth funds and help it to grow faster.

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Radio systems is another business in the pet
protection/pet care product business in the

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US, and again they were doing very well
but what we've been able to do is to give them

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fresh capital and fresh growth avenues so I think
that's the second area, which is companies looking

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for transformational growth. The third source
of investment opportunity in the last 12 months

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has been carve-outs; now a lot of companies,
global businesses have had to re-priorise their

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portfolios and divest their non-core operations.
In the UK private equity firms have completed

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more than 10 billion of carved transactions last
year and that is up from less than a billion in

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the previous year so you can see that a lot of
companies are trying to churn their portfolios.

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One example for instance in the UK that we
acquired was a business called Wolseley 

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- which is a plumbing and heating distribution
business which was carved out of Ferguson - so

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there were these three sources of opportunity
for us to deploy additional capital:

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needs of liquidity, are you looking out
for transformational growth and carve outs,

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you're on mute Ludo.

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So a question from Sanjay,
who was asking where were the

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the focus sectors and geographies in - and Sanjay
was emailing us from Mumbai - we have two

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other questions, one from Ned in Oxford,
which is a bit difficult, I think the answer

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will be we don't know, but the question was do
we have any proof yet that private equity owned

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companies have performed better than others
during this crisis? I think we in

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terms of academic research, we just barely got
some answers about how they did during the 2008

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crisis so I think he will have to wait another
10 years to have an answer to your question, Ned,

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but maybe indeed do you have something about
this you have observed on your portfolio? 

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Well I have observed our portfolio and as
I said right at the beginning that our

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portfolio has performed remarkably well through
this crisis in a very agile manner but I'm aware

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that there are several studies that have
actually shown that at times of distress

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private equity firms tend to do better than
public market firms and I think there is good

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reason for it. As we were discussing, at times of
stress like this you need agility. Agility is very

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important, speed of action, and I do believe that
private equity firms have an inherent advantage

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in terms of being able to move very very fast and
that's because they either have only a single or

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a very small group of shareholders, typically those
shareholders tend to be very close to the company,

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they're very engaged with the company, they tend
to know that the strategy of the business and the

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operations of the business very well and therefore
they're able to quickly align with management

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and take swifter action. Yeah so we're talking
in a sec about the the management just to bring

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up the academic study that looked at 2008 crisis,
the most evidence we have is by George Lerner

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and his co-authors and they found that indeed
it looks like they fared better, the private equity

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companies especially in 2008-2010 because of the
access, mainly because of the access to capital of

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private equity that they can then could do some
strategic acquisitions and I saw

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as well that I always try to avoid jargon,
or to specify it, so somebody in Linkedin

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is asking us to specify what the carve-out is, it
simply means that when you have a company that has

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different divisions they are selling one division
away to private equity so they are carving out

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one of their divisions, so it's as if Oxford
University was carving out the business school

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and we will become independent and 
fly with our own wings ...

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Ludo, I might just add one thing, I think,
I haven't seen the study you mentioned

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but I can understand that, I do believe
also that I've seen another study and this was

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Mckinsey, which basically shows that in recession
era vintages those firms that have deep

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operating skills tend to do better and again
one would understand why that would be the case.

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Yeah there was another question from 
Sovina which brings me to the management

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that you just mentioned, she's asking
 to talk about the change in

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management, in particular on firms, so again
there are some studies there showing that

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it's not that often that they
change management but they change it

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quite often and it's usually at the beginning, it's
not so much during the life, it's pretty rare

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that they fire management, it's like they acquire
a company and I think it's one time in three then

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they just change your management at inception
and usually stick to the management team. Any

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experience you want to share on on changing
the management and the role of management?

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Sure well look I think actually that's probably
the most important decision that you have to make -

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the team that you have on the playing field -
and that's a very important part of our diligence

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exercise and as I said right in the beginning
we prefer to back really strong management teams,

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now where that is not the case then it's really
important to try and put in the team as quickly

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as possible because as we said, we have a
defined whole period of five or six years

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and you don't want to lose time with the team that
you're not particularly confident of, so that's a

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very important priority. I think one of the things
that I would probably hear differentiate again

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with public companies is in public companies you tend
to appoint the leader and then the leader tends

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to appoint everybody else, I think in the private
equity business you need to get the whole football

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team on the playing field on day zero, the day you
would make a big difference, I've noticed that 

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big difference and therefore we would actually
support our leadership in quickly filling the gaps.

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Our operating partners have wide networks
in different industries and we want to make sure

0:19:09.280,0:19:16.480
that the whole field is covered with top talent
as quickly as possible. Now you asked about change

0:19:16.480,0:19:23.520
of management during the investment phase as
well, apart from the start that does happen

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and there are some cases where we need to do that,
what tends to be is sometimes the job

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to be done or the focus changes during the
period of an investment. Let me give you an example.

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there may be some people who are extraordinarily
good managers in the first phase when the company

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is private but when you're preparing a company
for instance to exit into public markets you need

0:19:49.760,0:19:55.360
a certain repertoire of skills and you may need a
different manager or leader at that point in time

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and if that is the case then we would make the
change. Actually something that has always

0:20:01.760,0:20:07.680
puzzled me is these narrative, and you use
these words, and when I read prospectuses from

0:20:07.680,0:20:12.080
private equity they often say that we invest only in
the number one, number two in the sector in the

0:20:12.080,0:20:16.320
best management teams and so on; actually my ...
would be like that the opposite would be better

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because if you invest only in the number one and
number two in the best management team there's

0:20:19.920,0:20:23.440
not much value you can add, there's not much you
can bring because these companies are doing fine

0:20:23.440,0:20:27.680
so you will pay a pretty high price for
them there is not much margin to improve things

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I would have expected that if you have special
skills you buy the laggers and then you make

0:20:33.120,0:20:38.480
them winners but I never hear that narrative.
Well I tell you one thing, if you buy companies

0:20:38.480,0:20:43.520
that are typically doing very well, it's unlikely
that you can buy them at an affordable price

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and therefore your in-going valuation would
be very very high and I think that when we

0:20:50.960,0:20:57.520
invest we actually try to invest in businesses
which we can bring something to as operators,

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in fact more than two-thirds of our
investments have been done in partnership

0:21:04.080,0:21:09.920
either with a seller or a buyer and that's because
they realise that actually we bring something

0:21:09.920,0:21:16.720
unique to that particular business at that point
in time. I mean throughout our last couple of funds

0:21:16.720,0:21:22.640
our investment in going valuations have been
a turn less than the industry for that reason.

0:21:24.080,0:21:29.200
Yeah, we are getting a question on 
on a slightly different topic, there are two

0:21:29.200,0:21:34.080
questions of that type, I'm going to take the
one from Marina in Singapore,

0:21:35.040,0:21:41.280
she's asking basically where to invest so that's
that's a question for you, I would have no clue.

0:21:42.400,0:21:49.600
Any particular vertical markets 
that would be interesting targets post the pandemic?

0:21:49.600,0:21:56.560
And also we'll cover change the value creation
methodology. So that's a really good question, I

0:21:56.560,0:22:03.200
would start by saying where not to invest, I think
it's very simple, you should not try to invest in

0:22:03.200,0:22:10.000
an area that you don't understand or don't know
and that is why our firm is organised in verticals:

0:22:10.560,0:22:17.040
we focus on certain vertical areas, we focus on
consumer and retail, we focus on certain aspects of

0:22:17.040,0:22:23.120
industrials, we focus on the healthcare sector, we
focus on certain aspects of business services and

0:22:23.120,0:22:30.080
we focus on certain aspects of technology services,
and when we see investments outside that space

0:22:30.880,0:22:38.720
we are very very cautious, so I think it's really
important not to extend yourself beyond your own

0:22:38.720,0:22:44.160
understanding and your own knowledge base. Now
different private equity firms have different focus areas,

0:22:44.720,0:22:52.080
some people would feel very comfortable investing
in a particular category where others would not

0:22:52.080,0:22:58.800
so pick your spot, I think pick what you know
and from our point of view it's where we have

0:22:58.800,0:23:04.080
operating partners and operating advisors
and teams that really understand that domain.

0:23:06.560,0:23:12.960
Okay we have a question from Cambodia asking
about what was the impact on your fundraising

0:23:12.960,0:23:19.520
efforts and exit strategy? So actually it's
quite interesting you ask that question;

0:23:20.800,0:23:27.520
last year in the midst of this entire COVID crisis
as I said we stepped up our investment rate and

0:23:28.160,0:23:32.640
deployed five and a half
billion dollars which is more than

0:23:32.640,0:23:39.280
double what we do normally prior to that but
in the same year we also raised our 11th fund

0:23:39.840,0:23:46.800
which was 16 billion dollars and that fund
again we raised through these sorts

0:23:46.800,0:23:51.760
of Zoom meetings and so on and so forth, so we
were able to raise funds this was certainly an

0:23:51.760,0:23:55.920
innovation people didn't think they
need they could raise funds via Zoom right.

0:23:59.680,0:24:03.840
You've gone on mute, Ludo. Ludo you're on mute

0:24:08.080,0:24:08.580
still.

0:24:13.920,0:24:20.640
I'm not the one controlling this so
sorry, so yeah what I hear on the

0:24:20.640,0:24:25.280
ground however is that it's easier for firms
like yours to have fundraised on Zoom because

0:24:25.280,0:24:29.600
people already know you so they don't need to
come and inspect you in a sense right or

0:24:29.600,0:24:36.800
or do too much, like for first-time funds
it's a nightmare to raise via Zoom so 

0:24:36.800,0:24:41.200
for you it was probably a bit easier but
nonetheless it seems to be... do you think it's 

0:24:41.200,0:24:46.480
there to change? Because because it was a huge tax
on people like you to, instead of spending

0:24:46.480,0:24:51.680
time helping companies you flying around the
world to meet investors was pretty taxing.

0:24:52.720,0:24:57.680
It's part of the job, I think in
private equity; you have to invest, you have to

0:24:57.680,0:25:02.560
deliver a return, and by the way it's only when
you deliver a successful return that you can

0:25:02.560,0:25:09.120
raise your next fund so it's part of the cycle,
and we are used to doing that - all of us of course -

0:25:09.120,0:25:14.640
we have a specialist investor relations team
and group that does that but all of us chip in

0:25:14.640,0:25:22.080
and help where we can and are deployed to to meet
our investors to explain our investing philosophy

0:25:22.080,0:25:27.840
to tell them about what we are doing and hopefully
raise more money so we're all part of that effort.

0:25:29.760,0:25:37.200
Can this work through Zoom? I think that's a
much broader question, it's not just about raising

0:25:37.200,0:25:43.360
funds; I think that what we've learned through
this last 12-month period is that we can do a

0:25:43.360,0:25:49.280
lot more on this kind of technology than we had
ever imagined, just think about what we're doing

0:25:49.280,0:25:53.840
right now typically this would have been
in a classroom only, people limited there,

0:25:53.840,0:25:59.520
and today we're able to talk sitting in our home
offices to people all over the world ... Actually

0:25:59.520,0:26:02.800
most of the questions - I was going to bring this up -
because most of the questions are coming from Asia.

0:26:04.800,0:26:11.920
Yeah it's hugely interesting. Now does that mean
that we can continue to work like this only and of

0:26:11.920,0:26:19.920
course the answer to that is no because you know
you do lose certain things. For example I think

0:26:19.920,0:26:26.560
you lose in terms of building a long-standing
culture and meeting new people and so on, there

0:26:26.560,0:26:32.000
are some things that only actually happen when you
when you meet in person. You know, today you chair

0:26:32.000,0:26:38.160
a board meeting like this on Zoom and that's fine,
it works very well we're all used to now doing it,

0:26:38.160,0:26:43.120
but then you click it off and it's gone; and
in a normal board meeting you would actually

0:26:43.120,0:26:48.720
sit around outside and you'd probably have some
fresh thoughts and and those conversations are

0:26:48.720,0:26:54.640
as important as what happens in the board meeting
so I think that the world will come back to some

0:26:54.640,0:27:00.080
happy mean in between. I think that
we'll have to come back; we won't go back to what

0:27:00.080,0:27:06.160
we used to do earlier in terms of the level of
travel but we'll find a new mean. Yeah, so we have

0:27:06.160,0:27:12.000
questions like, so asking about whether you invest
in Nigeria, there is a question from by Subhadra

0:27:12.000,0:27:17.600
from Chennai on how private equity performed
in emerging markets versus developed markets,

0:27:17.600,0:27:22.960
Is your firm- does your firm have experience
with that, do you invest also in emerging markets

0:27:22.960,0:27:30.320
especially like Africa or Asia? No, our
firm is principally focused, our global dollar fund

0:27:30.320,0:27:37.520
is focused on investments which are centred
either in the US or in Europe; now bear in mind

0:27:37.520,0:27:42.400
that those are global companies so they may have
operations all over the world including Asia and

0:27:42.400,0:27:48.560
Africa, but we don't invest directly through
CD and R in either of those geographies. We do

0:27:48.560,0:27:57.040
have a partnership with a fund in India called
Kedaara which invests in Indian companies and that

0:27:58.240,0:28:05.280
has also done extremely well, it's just
raising its third fund. We've been a partner of

0:28:05.280,0:28:11.760
this for about eight years and I think that
too has weathered the COVID crisis extremely well.

0:28:12.480,0:28:19.760
Okay, and there is Ari who's asking, given how
crazy the valuations are on the stock markets, why

0:28:19.760,0:28:27.200
aren't you just basically selling everything in
an IPO and running away? Well the point is

0:28:27.200,0:28:34.160
this: our job is not to sell and run away, our job
is to actually create sustainable value creation

0:28:34.160,0:28:40.400
and I think when we take on an investment that
takes time. we have a certain thesis and

0:28:40.400,0:28:46.240
we need time to develop and deploy that thesis,
whether it be in terms of growth or in terms of

0:28:46.240,0:28:54.160
cost reduction or whatever. So now, is it a good
time to exit certain investments? Yes of course,

0:28:54.160,0:29:00.720
and I'm sure everybody, and we will also try and
take advantage of the public markets to do so,

0:29:00.720,0:29:06.800
but I think one has to be very clear that
you have created enough value inside the company

0:29:07.600,0:29:14.720
to access the public markets; public markets are
intelligent investors. Yeah thank you, we are

0:29:14.720,0:29:20.080
about halfway so let me take this opportunity
to welcome those who have just joined us

0:29:21.040,0:29:26.480
to today's Leadership in Extraordinary
Times, I seem to have difficulty

0:29:26.480,0:29:33.600
saying that word. Today's topic is private
equity and of a contribution to the economy

0:29:33.600,0:29:38.400
 especially during the COVID crisis, and I'm
Ludo Phalippou, a professor of financial economics

0:29:38.400,0:29:44.000
at Oxford University Saïd Business School and my
guest today is Vindi Banga from the private equity

0:29:44.000,0:29:52.880
firm Clinton Dubilier and Rice. So I will have
to um to move to the ugly part at one point,

0:29:52.880,0:29:58.800
we keep on talking about the good part but 
we'll get there, I have some questions on

0:29:58.800,0:30:04.400
ESG and the like so that that will come
as I think at the end pretty naturally.

0:30:04.400,0:30:12.560
So how about we take one more
question from Vitia in Singapore about

0:30:12.560,0:30:17.760
your thoughts on the competition and
interaction between SPACs and private equity firms.

0:30:19.440,0:30:28.080
Well look, we've all watched the the raising
of so many SPACs, I think we have to wait

0:30:28.080,0:30:34.320
though and watch to see how successful they
are, I mean SPACs basically are trying to offer

0:30:35.680,0:30:43.040
an easier route into the public markets for
businesses; I think we have to wait and watch,

0:30:43.040,0:30:50.400
I mean, it's very early to judge
what the real potential of the SPACs will be.

0:30:52.400,0:30:56.000
A lot of capital has been raised right
now very little has been deployed.

0:30:57.280,0:31:02.240
So there is a question from Germany
by Alexander, related - I think - to what

0:31:02.240,0:31:06.160
we just talked about so let's do that one
and then we'll move on to the more

0:31:06.160,0:31:12.400
controversial aspect. So he says in times
of crisis you need extreme speed of action

0:31:13.040,0:31:18.720
and then he says isn't it your experience
that in founders, startup companies

0:31:19.360,0:31:25.760
you would go faster than if you
have an established PE firm finance company in

0:31:25.760,0:31:34.080
with respect to the speed and agility. 
I think the two cases are very different; 

0:31:35.200,0:31:42.400
yes of course founders and startup can be very
quick but they also benefit from being supported

0:31:42.400,0:31:48.160
by the appropriate venture capital firms. Because
the venture capital firms have the benefit of

0:31:48.160,0:31:54.800
of many many startups, of many having seen many
founders, of seeing many situations, so those

0:31:54.800,0:32:00.560
firms benefit from those type of partnerships
or support from venture capital firms and

0:32:00.560,0:32:06.640
yes, they are agile of course - they have to be - in
fact most founders and startups as you all know

0:32:06.640,0:32:11.760
pivot through maybe two or three times before
they discover a successful direction.

0:32:13.440,0:32:18.720
So moving on now to the second aspect
of what we wanted to do today, as you may

0:32:18.720,0:32:25.120
have noticed, private equity firms do not have
a particularly splendid public image and what

0:32:25.120,0:32:29.920
we've described so far is extraordinary,
everybody should love private equity and embrace

0:32:29.920,0:32:35.040
private equity as a form of ownership and yet
that's not quite, we see in the media, in fact

0:32:35.040,0:32:40.720
there was a recent Channel Four programme talking
about the private equity sector in the UK that was

0:32:40.720,0:32:45.840
pretty bleak and very negative and
that's quite typical: you open a newspaper

0:32:45.840,0:32:53.920
it's usually to turn like a
negative story. It looks like no one is denying

0:32:53.920,0:32:58.400
or maybe some people don't realize enough what you
just said that is possible that there may not be

0:32:58.400,0:33:04.080
enough communication about that, but I think most
people agree with everything you've said so far. I

0:33:04.080,0:33:10.400
think the point of tension is on the leverage
aspect, right. In everything you just described, you

0:33:10.400,0:33:14.880
describe about helping companies to grow etc and
that doesn't generate any controversy, I think

0:33:14.880,0:33:23.040
the controversy comes from the fact that somehow
there is leverage that is added to,

0:33:23.040,0:33:28.960
a lot of debt that is added to portfolio companies.
And if things are going well and you do increase

0:33:28.960,0:33:33.520
the value of companies leverage means you will
earn a lot more money which I guess people can

0:33:33.520,0:33:39.120
live with and they are fine with that; but the
flip side of this would be if things don't go well,

0:33:39.120,0:33:43.840
given the high level of debt, you don't have that
much margin for error and then any error would

0:33:43.840,0:33:51.520
then just like destroy a company and on textbook,
in principle that shouldn't be

0:33:51.520,0:33:58.640
a big deal; if it's an economic problem,
if it's purely financial distress

0:33:58.640,0:34:03.520
then the private equity person should just lose the
control of the company then someone else is picking

0:34:03.520,0:34:08.080
it up and if the company is economically viable
they just carry on, but in practice we see it's

0:34:08.080,0:34:13.760
not what's happening and the companies may
be forced to shut down. There are tons of

0:34:13.760,0:34:19.040
examples, like Toys R Us etc, where it looks like
they couldn't, the company was maybe viable

0:34:19.600,0:34:25.760
economically but it is the leverage put on by
private equity firms that killed it, and then that

0:34:25.760,0:34:31.920
means lots of people that already don't earn much
money, that whose situation is financially fragile,

0:34:31.920,0:34:37.280
but then become in a tremendous distress and a
kind of a collateral victim of private equity

0:34:37.280,0:34:41.120
and I think this is where the controversy comes
from. People don't deny any of what

0:34:41.120,0:34:45.760
we've just said in the first half but they have
an issue with why it is you take this leverage

0:34:46.320,0:34:53.200
bet on this and at the cost of the society picking
up the pieces if it doesn't go well and you're

0:34:53.200,0:34:59.760
picking up a reward if it is going well. Look I
think every company whether public or private

0:34:59.760,0:35:06.800
uses leverage. It's a question of judgment as to
what is the level of leverage that an individual

0:35:06.800,0:35:11.600
asset can support and that's a judgment that
public companies make, as private companies

0:35:11.600,0:35:16.720
make, every businessman makes that judgment even
a founder, so I think the first point is to be

0:35:16.720,0:35:22.800
very thoughtful about the amount of leverage you
place on an investment and that depends a little

0:35:22.800,0:35:29.120
bit on the business, the market, the volatility
in that industry, the competitive dynamics and

0:35:29.120,0:35:34.800
the opportunity for growth, so all of those need to
be taken into account. Now coming to the question

0:35:34.800,0:35:41.840
of what happens when companies run into difficulty,
look, business does run into

0:35:41.840,0:35:49.680
difficulty for sure, walking away from a company,
in my book it's not an option, it's certainly not

0:35:49.680,0:35:56.400
an option for CD and R, why? Well first of all you
lose your investment, but that's one issue, the

0:35:56.400,0:36:02.480
bigger issue is your reputation and that's what
Ludo is talking about; our reputation

0:36:03.040,0:36:07.840
is the currency with which we are able to
source new deals and that's particularly

0:36:07.840,0:36:13.040
because more than two-thirds of our deals are
in partnership with the buyer or the seller

0:36:13.680,0:36:17.840
and therefore actually where we have business
challenges - What do you mean it's in partnership

0:36:18.400,0:36:24.960
with with a seller? How does that work? - So let's
say there is a company that wants to divest an

0:36:24.960,0:36:32.000
asset; they could either divest that asset to us in
one go, typically those tend to be non-core assets

0:36:32.000,0:36:37.440
right, and when they're non-core assets they've
often been starved of capital, starved of operating

0:36:37.440,0:36:45.120
talent, starved of growth and initiatives, so
if a company sells a non core asset like that -

0:36:45.760,0:36:51.280
let's say it realises the value of hundred - on
the other hand if they decide to keep a share

0:36:51.280,0:36:57.840
of that and partner with us and they hand
over the operational responsibility to us

0:36:57.840,0:37:03.120
and exit in a second stage then typically
they would make two or three times their money,

0:37:03.120,0:37:09.040
that's been our experience. But why do you give
them that? Right, because you're doing all the work

0:37:09.040,0:37:13.760
and you're just giving them - is it 
because then you can buy it for a lower price?

0:37:13.760,0:37:18.400
Or and I have never heard of that actually,
so and I would also expect you to be one of the

0:37:18.400,0:37:23.920
only ones to do it, I don't think it's that common.
Well actually our history is very much in this,

0:37:23.920,0:37:29.520
in fact one of the first deals we did like this
way back - I'm now probably talking 30 years ago,

0:37:29.520,0:37:37.920
35 years ago - was when we bought Lexmark out
of IBM and at the time the typewriters and

0:37:37.920,0:37:42.240
the mainframe computers used to be sold by the
same sales force and that didn't make sense.

0:37:43.040,0:37:49.200
So we actually stepped in and helped IBM carve
out the typewriter division and we had to stand up

0:37:49.200,0:37:55.760
the whole division with a separate sales force etc
and IBM kept a stake in Lexmark. That's one example

0:37:55.760,0:38:01.440
of a partnership deal and in our history
we probably got more, as I said more than two

0:38:01.440,0:38:08.480
thirds. But again you asked why do we do it, why
do we do it, actually there's a very good reason:

0:38:09.520,0:38:15.280
when you do a partnership deal you firstly are
hopefully able to invest at a more attractive

0:38:15.280,0:38:21.280
price because it's not being sold in an
auction and the seller is thinking much more

0:38:21.280,0:38:26.560
about hey I might be able to get 10 per cent more today
in an auction, but I might be able to get two or

0:38:26.560,0:38:33.040
three times my money if I keep 40 per cent, transfer the
ownership to this private equity firm which will

0:38:33.040,0:38:41.200
be focused on that asset, help it grow, help it
revive and then we exit together, so that's one reason.

0:38:41.200,0:38:47.040
The second reason is that when you're in carve
outs there's a lot of activity in the carve out.

0:38:48.080,0:38:53.440
You have to create a new sales force, you
might have to change supply chain arrangements etc

0:38:53.440,0:38:59.440
and when you do that if you're in partnership you
can do it in a more coordinated way, otherwise the

0:38:59.440,0:39:07.120
risk of transition could be quite high. Yeah, no, I
had never heard of that approach actually,

0:39:07.120,0:39:11.120
would you say you - and it's making sense -
that you can then get a lower price and you avoid

0:39:11.120,0:39:14.400
an auction? I think especially nowadays
where everything goes through an auction

0:39:14.400,0:39:21.120
it is probably a very good idea - But
you seem to be the only firm to do that? -

0:39:22.240,0:39:27.680
Well I wouldn't say we're the only firm but
what I would say is that the vast majority of

0:39:27.680,0:39:34.000
our transactions come that way and that's,
I believe it's really important and that plays

0:39:34.000,0:39:39.920
back to what we were saying earlier, that is why
it is so important that we are very thoughtful

0:39:39.920,0:39:46.000
about our reputation. Our objective, when
we invest is to create sustainable value

0:39:47.040,0:39:53.600
and we must ensure that we do that with
our partners, in particular. Still on this

0:39:53.600,0:39:58.320
topic, that was Luis from London was asking,
I thought about asking about earlier actually

0:39:59.360,0:40:03.840
how does the interaction between the operating
partners and the management team works in a sense

0:40:04.480,0:40:08.320
it feels like a bit duplicating right so there is
a management team are supposed to manage and then

0:40:08.320,0:40:14.000
you have your own operating partners how when does 
that work well. Luis, that's a really good question

0:40:14.000,0:40:19.120
and I often get asked that, it's actually quite
straightforward, look, our job is not to manage

0:40:19.120,0:40:25.600
the company - there's a management to do that -
our job is to support the management, but first of

0:40:25.600,0:40:31.040
all to make sure we have the best management and
then support them to really get on with the job.

0:40:31.680,0:40:36.800
And we can help them because we have seen many
situations like this before, we have looked at

0:40:36.800,0:40:42.720
different industries, we have looked at different
geographies so we can actually help them see

0:40:42.720,0:40:49.040
what they may or may not be able to see on
their own. Think about an analogy of a coach

0:40:49.040,0:40:56.320
and a captain in a a sport field,
that's it, the coach doesn't play the game,

0:40:57.120,0:41:03.600
he's not on the field but he's very much there
to think strategy, to be a brainstorming partner

0:41:03.600,0:41:10.640
with the team and to help them become a better
team, that's our job. I see, I like that analogy.

0:41:11.280,0:41:18.640
If we go back to leverage... One other thing
before we need that topic: we have

0:41:18.640,0:41:24.640
today, I would say probably about 40 operating
partners or operating advisors in the firm

0:41:25.440,0:41:32.160
and most of them - in fact all of them not most -
all of them have had very successful careers in

0:41:32.160,0:41:39.200
in whatever they did earlier; they're at a stage
where they actively choose this role to be a coach;

0:41:39.840,0:41:46.720
they actually don't wish to be a CEO anymore,
they've been there, done that, got the t-shirt,

0:41:47.680,0:41:52.400
and now it's about helping and supporting
people, energising them, helping them achieve.

0:41:53.360,0:41:58.480
The main source of controversy about
operating partners where, about 

0:42:00.000,0:42:05.360
the cost and who bears it right. So there is always
this question on should the portfolio company pay

0:42:05.360,0:42:10.560
for the operating partners in which case it is
effectively the LPS paying for this on top of a

0:42:10.560,0:42:14.960
management fees they pay to the funds, or should
it be the firm paying the operating partners.

0:42:17.120,0:42:23.200
It does generate a conflict of interest. In
our firm, the operating partners are part of the

0:42:23.200,0:42:28.400
firm CD and R just like the financial partners.
So you're paying the salary entirely?

0:42:28.400,0:42:33.360
Well we don't draw salary, we're 
partners of the firm that's it, if the

0:42:33.360,0:42:38.000
firm is successful you'll be successful but
therefore we are very much part of the firm.

0:42:39.040,0:42:44.960
Okay so the portfolio companies do not pick
up the tabs? So then you close

0:42:44.960,0:42:49.760
that conflicts of interest, but you agree that
it's not the case at all, the other firms right?

0:42:49.760,0:42:53.600
I actually don't know how the other firms
particularly work but I know that's the

0:42:53.600,0:42:58.240
model in our firm which is that we don't 
create a burden on the portfolio companies.

0:42:59.120,0:43:06.080
Okay and we'll go back to the leverage, I guess,
so the controversies that that we've seen

0:43:06.080,0:43:11.360
especially during the COVID crisis that see
these companies that were owned by private equity had

0:43:11.360,0:43:16.000
a lot of leverage, a lot of them were retailers
that everybody knew et cetera, so there were

0:43:16.000,0:43:23.280
brands people know and sometimes loved 
and then comes Covid and then they are

0:43:23.280,0:43:28.160
running out of money pretty quickly
and then they turn to the government and say

0:43:28.160,0:43:33.520
well can you help us out? And then there was this
controversy which is, well if you hadn't put so

0:43:33.520,0:43:38.640
much debt on them to begin with, you wouldn't need
so much bailout from the government so is it again

0:43:38.640,0:43:43.920
a case of a famous sentence 'capitalism
for a rich. communism the poor', like

0:43:43.920,0:43:48.480
once you're in trouble then is the taxpayer who
has to bail you out, any thoughts on that?

0:43:48.480,0:43:53.440
Well I think that the governments all over the
world have been very thoughtful about how to

0:43:53.440,0:44:00.160
help business through this crisis and I'm glad
that they have actually not followed any criteria

0:44:00.160,0:44:04.880
on what is the source of ownership, rather they
have focused on the sustainability of business

0:44:05.520,0:44:11.520
and when you see for example, many of them have
tried to protect employment through either the

0:44:11.520,0:44:17.840
furlough kind of scheme that was used in the UK,
or other such employment support schemes all over

0:44:17.840,0:44:24.320
the world and those schemes come with certain
formulas, certain norms and I believe every 

0:44:24.320,0:44:31.680
firm, whether it's owned by private equity
or by venture capital or by public markets, should

0:44:31.680,0:44:38.880
actually access that but play by the norms of that
scheme and that's what's good. Yeah so you say it's

0:44:38.880,0:44:45.840
good to have this social backup for any businesses
but I guess on the upside when companies

0:44:45.840,0:44:51.600
are doing well then then they hopefully pay
taxes so that they can contribute to this social

0:44:51.600,0:44:57.840
safety net, right. More than that I think
what happens is you know companies that do well

0:44:58.480,0:45:04.160
and this might be taking us into the area of ESG
but companies that do well do well for a whole

0:45:04.160,0:45:08.960
set of reasons. First of all, their customers
are happy and their customers are doing well,

0:45:09.600,0:45:14.720
their employees have to be happy and satisfied
and engaged and are therefore doing well

0:45:15.280,0:45:21.680
so companies that do well, when you create
sustainable value your whole ecosystem

0:45:21.680,0:45:27.680
does well. Of course you pay taxes but your whole
ecosystem does well and when that happens that's

0:45:27.680,0:45:39.360
good for society, it's good for everybody. Yeah, okay,
so again, do you think it makes a difference

0:45:40.160,0:45:47.440
again in theory when you have too
much debt and you cannot pay that debt,

0:45:47.440,0:45:52.640
in principle the equity holder is just losing
its stake and then we move on to the debt holder

0:45:53.360,0:45:59.200
and unemployment should be unaffected so there
is no need to help the equity holder or in case

0:45:59.200,0:46:05.200
of a downturn, it happened here and the argument
often on the table was the debt holder is not

0:46:05.200,0:46:10.560
capable of running a company but then if it is the
case then it looks like privat equity can basically

0:46:10.560,0:46:15.280
never lose because if there's a downturn
they say you should need to save employees so

0:46:15.280,0:46:20.000
bail me out because nobody else can run this
company and if things are going well then they win.

0:46:20.000,0:46:28.000
So again I think typically the
equity holder has the responsibility of actually

0:46:28.000,0:46:33.440
finding a pathway through crisis and that's
what I was saying earlier, when crises happen

0:46:34.080,0:46:40.080
the responsibility is to double down and find a
solution. Now in finding a solution it is possible

0:46:40.080,0:46:45.920
that you might want to involve other stakeholders
beyond yourself: it could be the debt holders,

0:46:45.920,0:46:51.200
it could be yourself by putting in more equity,
it could be a constellation of these actions

0:46:51.200,0:46:57.760
that you create and you try to lead a solution
out of that crisis; that I believe is responsible

0:46:57.760,0:47:04.640
management. Okay, we're getting some questions
on taxes so Anurika from London is saying

0:47:04.640,0:47:10.880
well what happens if companies are not paying
taxes? So private equity has not been the

0:47:10.880,0:47:16.400
only one to be creative to lower the tax bill,
others have been as well, but private equity certainly

0:47:17.040,0:47:23.040
it's pretty creative when it comes to 
lowering the tax bill of companies and

0:47:23.040,0:47:30.080
Ari is also asking whether you could comment on
the potential tax change treatment

0:47:30.080,0:47:36.480
of carried interest and then maybe also the
Biden changes and all the countries trying to

0:47:36.480,0:47:42.640
make companies pay taxes. So right
now it looks like a lot of companies have been

0:47:42.640,0:47:48.880
avoiding the tax man. Look I think that
again it doesn't matter whether you're in private

0:47:48.880,0:47:54.720
ownership or public market ownership, you have to
pay the taxes according to the law of the land.

0:47:54.720,0:48:00.560
Every country has its tax laws then
there are international tax laws and you have to

0:48:00.560,0:48:05.760
operate under that regime and that's just fair,
it doesn't matter what kind of ownership you have.

0:48:05.760,0:48:12.400
Having said that, what do I think
about what will happen? I honestly don't know,

0:48:12.400,0:48:18.480
I don't know you know what will happen
to the taxation of carried interest or not.

0:48:19.040,0:48:24.160
My view is look whatever the taxes are, they
have to be paid. Today we pay all kinds of taxes

0:48:24.160,0:48:27.520
and you have
to do business under that environment.

0:48:28.400,0:48:33.840
But they still- it's not quite that but
we are pretty much in a world where

0:48:34.880,0:48:38.960
if you're wealthy enough you basically
decide whether you want to pay taxes or not,

0:48:38.960,0:48:42.960
if you're a big company you basically decide
whether you want to pay taxes or not because

0:48:42.960,0:48:49.280
you can have an aggressive tax avoidance strategy,
like Starbucks and companies like that, and

0:48:49.280,0:48:53.760
effectively not paying any taxes it's almost a
choice of companies to decide whether they're

0:48:53.760,0:48:59.040
going to pay taxes or not. We see big large
companies that says I decided not to pay taxes by

0:48:59.040,0:49:03.760
using the laws and I'm within the laws
and then it turns out I don't pay taxes,

0:49:03.760,0:49:09.200
and we see some big companies saying I could avoid
taxes but because I don't want that vis-a-vis my

0:49:09.200,0:49:14.480
stakeholders and my responsibility vis-a-vis
society, I decided to go ahead and pay taxes

0:49:14.480,0:49:20.800
at a higher rate than I could. Well look I think
this again takes us back into the area of ESG

0:49:21.840,0:49:28.080
and I think if you are interested in being a
sustainable business then you have to follow not just

0:49:28.080,0:49:33.920
the letter of the law but the spirit of the law
and I think that's what responsible companies do.

0:49:34.880,0:49:41.280
Do you see taxes being discussed much in ESG? To
me so far ESG often discusses like the fraction

0:49:41.280,0:49:46.400
of women you have in a company, what do
you do vis-a-vis maybe the environment and the

0:49:46.400,0:49:53.040
carbon footprint at best, that's pretty much
it or that's most of the topics. I rarely see

0:49:53.040,0:49:58.480
much discussion in ESG of companies saying we've
decided to pay more taxes than we could have had

0:49:58.480,0:50:02.800
because we think it's our responsibility to
pay taxes. I've never seen a statement but

0:50:02.800,0:50:11.680
maybe I missed it. I think that in the area of G
under governance certainly appropriate taxation

0:50:11.680,0:50:18.240
responsibility is an important aspect of companies
and they must have a policy as to how they

0:50:18.240,0:50:24.160
actually operate in different tax regimes. You are
right in pointing out that international companies

0:50:24.160,0:50:31.120
in particular have to think very carefully
about what is a responsible tax activity.

0:50:32.960,0:50:37.360
Because you do have your shareholders right, so if
you decide to pay on no taxes your shareholders

0:50:37.360,0:50:43.360
are getting less. So Anurika was asking
again in a question saying well she was she was

0:50:43.360,0:50:49.840
stating in a question, I think rightfully,
that PE-backed portfolio companies seem to engage

0:50:49.840,0:50:55.200
significantly more in non-conforming tax
planning and have lower marginal tax rates

0:50:55.200,0:51:00.640
on over private firms. So well I don't know,
 as I said I can't speak for the industry,

0:51:00.640,0:51:05.600
I can just talk about our firm and I would tell
you that we are of course very thoughtful but

0:51:05.600,0:51:10.640
extremely responsible about how we approach
the subject of taxation for all our companies.

0:51:12.160,0:51:20.080
Okay and so if there is a change on 
carried interest tax, you don't think it will

0:51:20.080,0:51:24.880
lead some private equity professionals to move
houses to other places and things like that?

0:51:24.880,0:51:34.240
It's a threat, look I mean you can't change your
business model or your life just because of taxes,

0:51:35.760,0:51:42.080
 you can't do
that. But I think at a different level,

0:51:42.080,0:51:48.240
and again this is taking us into the space of
ESG, I think that one has to realise

0:51:48.960,0:51:55.840
that as a company you don't only have a
shareholder, you have multiple stakeholders.

0:51:56.800,0:52:04.640
The best companies in history have been companies
that have always actually taken care of all their

0:52:04.640,0:52:10.160
stakeholders, their customers, their employees,
their supply chain, their extended supply chain,

0:52:10.160,0:52:18.240
the regulators - everybody. Those are the companies
that actually command the highest multiples in

0:52:18.240,0:52:24.880
any industry they operate in. Now there is a
reason for that and that is why ESG is good

0:52:24.880,0:52:32.800
for business. ESG is not something that
you have to do, ESG is something that you must do,

0:52:33.440,0:52:38.640
and you must do it because it's good for business;
your employees want it, your consumers want it,

0:52:38.640,0:52:44.960
your customers want it, your governments want it,
I mean it's non-negotiable

0:52:44.960,0:52:52.400
in my view. I'm sceptical
about the win-win doctrine so but that would

0:52:52.400,0:52:59.040
be fun over a podcast, I'm happy people
are more responsible, I'm not quite sure it's

0:52:59.040,0:53:03.920
as simple as saying if I am responsible
then I will do well, but I think people

0:53:03.920,0:53:11.200
need to go beyond that and being much more
proactive in their responsibilities, so

0:53:11.200,0:53:16.160
right now there is some emergencies in
India, elsewhere where we see the

0:53:16.160,0:53:22.320
landscape in the UK on retail is 
absolutely terrifying, the tax issue is

0:53:22.320,0:53:28.560
is a big deal, we don't collect as much taxes
as we used to own businesses, so is quite,

0:53:28.560,0:53:36.400
a number of things that that are red hot on
that space. Talking of which the things are ...

0:53:36.400,0:53:41.920
Look at that, if you stay with that I agree
with you and that's the point I meant actually

0:53:41.920,0:53:47.840
I mean that every business person - doesn't matter
which business you're in, which country you're in -

0:53:48.880,0:53:55.680
you must make sure that your business engages with
the society around it in a very responsible way

0:53:55.680,0:54:01.920
and help when there's a problem. Similarly, you as
an individual if you're fortunate today to have

0:54:01.920,0:54:07.600
more than many others then it's up to us
to actually see how we can help and we can

0:54:07.600,0:54:13.520
help in kind, we can help in money, we can help
personally. I think it's really important for

0:54:13.520,0:54:19.600
business to be engaged with society and certainly,
if I come back to all the firms that

0:54:19.600,0:54:25.520
I've been associated with, If I think back to
my corporate career, Unilever was deeply in

0:54:25.520,0:54:31.760
involved with society, it was the first
employer to employ women in the UK,

0:54:33.360,0:54:38.160
the first and that was because the
women were fundamentally more productive

0:54:38.160,0:54:45.120
on the shop floor and therein lies the kernel of
let's say the responsibility doctrine in Unilever.

0:54:45.120,0:54:52.400
In CD and R we have the same philosophy. As a firm,
we do what we can, as a private equity firm and

0:54:52.400,0:54:58.080
through our portfolio companies we try to be as
responsible as we can ,so there is a huge focus

0:54:58.080,0:55:05.840
nowadays and it's actually two themes that -
are you you're on mute you're on mute Ludo

0:55:16.480,0:55:19.840
you're on mute

0:55:27.840,0:55:34.160
still on mute. It worked now yeah, sorry
about that my mic keeps on dropping.

0:55:34.800,0:55:40.400
So there are two things that are
very dear to the school is climate and

0:55:41.040,0:55:46.960
justice - social and racial - is there anything
that you have observed over the last 12 months

0:55:46.960,0:55:50.720
when these issues have been coming even
more centre place than they used to be?

0:55:51.440,0:55:57.360
Any concrete actions that were taken at your
firm or around you on these issues?

0:56:00.960,0:56:07.280
We've been focused on these topics many years
earlier, we have not adopted ESG today

0:56:07.280,0:56:13.200
we've been actually on this journey for a very
long period of time. To your specific points,

0:56:13.840,0:56:21.440
as a firm we are very focused
on inclusion, diversity, we are trying to get

0:56:21.440,0:56:27.040
in people from different backgrounds and try
to actually assimilate them in the firm but

0:56:27.760,0:56:34.560
we can do much more through our portfolio
companies. Today our portfolio companies employ 225,000

0:56:34.560,0:56:42.240
people and have much greater impact, so we are
actually focused on how our portfolio companies

0:56:42.240,0:56:51.200
can have a very responsible ESG focus what do we
do. So when we actually diligence the firms that

0:56:51.200,0:56:57.920
we're going to invest in, we look at them through
the ESG lens and as soon as we've invested within

0:56:57.920,0:57:05.440
the first 100 days we put together a very relevant
ESG programme for that company. As you might imagine

0:57:05.440,0:57:11.840
every company could have different focuses,
two items are always common I would say - carbon

0:57:12.880,0:57:19.600
and diversity - these are common to all companies,
but on other aspects different companies choose

0:57:19.600,0:57:25.600
other areas that might be relevant and then
we actually help them through the period of

0:57:25.600,0:57:34.400
of their investment with us to improve on the ESG
plan. We think that ESG initiatives are just like

0:57:34.400,0:57:41.120
growth or cost: it adds value.
And I'd come back to what I said earlier that

0:57:41.120,0:57:47.120
at the end of our ownership period if
we can increase the ESG embedded value

0:57:47.760,0:57:53.840
in the company that we have invested in, I think
we will command a better multiple on our exit.

0:57:54.640,0:58:00.880
Okay well sadly we're out of time, it's
been a fantastic discussion so thank you so much

0:58:00.880,0:58:05.920
Vindi,  it was really really good. Thank
you so much. Thank you, Ludo, it's been a pleasure.

0:58:07.840,0:58:12.640
Everyone note that all of these discussions
are available as a podcast, you're able to

0:58:12.640,0:58:18.480
download this episode soon then you
can catch up now on previous events,

0:58:18.480,0:58:23.040
wherever you get your podcast from just
search Leadership in Extraordinary Times.

0:58:23.600,0:58:27.680
Also if you're interested in private equity,
I have my own podcast series which is called

0:58:27.680,0:58:35.520
Private Equity Laid Bare that you can also find on
any of your usual platforms, and there were

0:58:35.520,0:58:41.120
a good number of viewers today, thank you for
for your interest. Please feel free to

0:58:41.120,0:58:49.120
join the next Leadership in Extraordinary Times
event, and this one is on Tuesday May the 18th

0:58:49.120,0:58:56.000
at 2 p.m British Standard Time - that's just
under a fortnight's time from now - and just

0:58:56.000,0:59:02.800
four days before Stade Toulousain will play
the final of the European Rugby Cup at Twickenham,

0:59:02.800,0:59:17.840
which they will win for the fifth time in a row. So
goodbye and have a very nice day bye-bye bye-bye

0:59:43.680,0:59:44.180