Paving the way for women in business
Congratulations, Beth, on becoming the first female to win the Insider Dealmaker of the Year award in 29 years. How do you feel about this achievement?
Being recognised with this award is a real honour, especially as the first woman to receive the award in 29 years, and I hope this opens the door for many more women and other diverse winners in the future. It’s important to mention that I’ve been fortunate to find incredible support from the women and men in the Manchester finance community, which has been invaluable during the last 15 years in the region.
In order to ensure females don’t have to wait another 29 years for this recognition, what changes should the industry make?
It’s a structural challenge within the industry that won’t change overnight. Over the last five years or so, we have seen more women being recruited into PE, which is fantastic. However, we now need to focus on providing adequate support for women through various life stages, such as having children, going through menopause, or caring for elderly relatives. We need strategies that help women stay in the industry, paving the way for their rise to partnership, but this transition will take time. It’s not solely about enhancing gender diversity within the industry; it should also encompass a broad spectrum of diversity, including social, racial and disability, to ensure the industry is more accessible to all.
Nonetheless, I’m optimistic we’re heading in the right direction and have been for some years. Sustaining this progress, particularly during challenging economic times, is vital to ensure that diversity and inclusion remain at the forefront of our priorities.
Reflecting on the past five years with Funds I and II, what do you attribute to the fund’s growth, reputation, and long-term sustainability?
Palatine have a 13-year heritage in ESG, so when we started to think about raising an impact fund, our investors believed that we could combine our strong returns track record with an impact focused strategy. We were one of the first impact funds in the UK, so it was really important for the industry that we could prove impact funds could deliver market and above market rate returns. Fast-forward six years, and Fund I has seen four successful exits already with a strong portfolio of companies. The success of Fund I means we have been able to raise our second impact fund, and since its final close in April 2023, we’ve completed three new deals across social and environmental companies.
None of this would have been achievable without the fantastic impact team we built at Palatine. The team is passionate and deeply committed to investing in businesses that generate significant impact while ensuring market-rate returns. For instance, in 2017, we invested in ‘Trade Skills 4U’, which aids mid-career individuals in acquiring electrical qualifications, enabling successful reskilling and upskilling of a hard to reach demographic; we successfully sold the business to City and Guilds in 2022.
What has been the most exciting Impact deal you’ve been a part of?
We take immense pride in our social and environmental investments. Through our social deals, we have witnessed the profound impact we can have on individual lives. In contrast, our environmental investments can have a global influence in the carbon reduction, ecology and circular economy arenas.
Investing in companies like ‘Back2Work’, which supports thousands of people across the UK into the workplace, is not just about changing the lives of those retrained for employment. It extends to their families and communities, creating a ripple effect that positively impacts many lives. Seeing these transformations resulting from social impact investments is truly rewarding.
Similarly, our investments in environmental companies support their significant global influence. For instance, ‘Anthesis,’ an environmental consultancy focused on aiding companies in achieving net-zero targets, has already showcased far-reaching global impacts on climate change. This investment was particularly remarkable not just for generating strong impact returns but also a 6x financial return on exit.
How do you anticipate the impact investing sector evolving over the next five years?
Palatine was an early adopter in the impact sector, and we’re now seeing considerable interest from larger buyout funds entering this space. This shift creates an environment where the deals we engage in are becoming more appealing to participants in the broader buyout landscape.
Additionally, there’s a rising focus on evidence-backed impact, where investors seek more explicit proof of the impact generated and better measurement and reporting practices. Furthermore, we are seeing stricter regulations emerge, such as SFDR in Europe and SDR in the UK, indicating a probable increase in regulatory stringency within the impact sector.
On the deal side, you are going to see a host of exciting opportunities emerging within the impact sphere. For instance, our recent investment into ‘Roydon’, a waste and recycling business, is supporting companies in the FMCG sector to recycle waste that would have once gone to landfill. Deals like our 2022 investment into ‘Inclusive Employers’ are now viable, owing to the growing significance of diversity and inclusion in the workplace. This ever-evolving landscape promises continuous transformation, consistently presenting compelling investment possibilities.
What specific attributes do you prioritise when evaluating an impact deal?
A key focus in completing an impact deal lies in the intentions of the management team. It’s crucial, from an impact perspective, that the team is genuinely committed to achieving impact alongside financial returns. Previously, we’ve rejected deals that appeared highly impactful but where the management prioritised profit over impact.
As a returns-focused fund, we approach impact deals similarly to how a buyout fund assesses opportunities. However, our focus on impact introduces additional considerations. We will examine the size and uniqueness of the problem a company aims to solve and who it is trying to help, ensuring the impact is significant enough to warrant an investment from the fund. Consequently, our investment process involves more considerations on things such as supply chain, quality and, durability of impact, etc., compared to a traditional buyout fund.
What’s been your proudest moment so far?
I took immense pride in successfully raising Impact Fund I, a milestone that made Palatine the first returns-focused Fund to achieve this, an achievement I am very proud of. However, securing Fund II was even more significant. It involved fundraising built on the success of Fund I, serving as a testament to our demonstrated success in delivering both impact and returns. Raising Fund II also validated our strategy and our achievements with Fund I.