Ardian joins KKR-founded partnership Ownership Works

Ardian’s profit sharing programmes for buyout portfolio companies are ‘an important element of our license to operate’, says deputy head of buyout funds Thibault Basquin.

Ardian is doubling down on sharing profits with portfolio company employees. The $180 billion-AUM firm has become Europe’s first to join Ownership Works, the KKR-founded non-profit that pushes investors to share the upside with employees. Ardian has committed to rolling out Ownership Works’ programme at three portfolio companies by 2024 as part of the partnership, according to a statement from the firm emailed to New Private Markets.

Employee ownership is a growing movement in the US. It helps employees create personal wealth and fosters more commitment to contributing to the company’s growth and profits, Pete Stavros, KKR’s co-head of Americas private equity and the founder of Ownership Works, told affiliate publication Private Equity International earlier this year (registration or subscription required).

Ardian already has some experience in sharing economic gains with portfolio company employees. Prior to joining Ownership Works, the firm had allotted a portion of its capital gains at exit to employees of 40 portfolio companies, according to the statement. In this value-sharing model, 31,000 employees – but not all – have received a lump sum calculated as a percentage of their salaries when Ardian exited the company, a spokesperson for the firm told New Private Markets. Ardian had also set a target to implement this value-sharing scheme at all companies in the firm’s buyout and expansion strategies.

Ownership Works’ model, which Ardian is trialing at three portfolio companies, involves offering equity ownership to employees from the start of the programme, rather than when the investor exits. All full-time employees are eligible for the pathway to equity ownership in the Ownership Works model, “with some variation dependent on factors such as tenure”, the spokesperson for Ardian said.

The new programme also involves extra benefits for employees such as financial education opportunities and “an employee engagement programme”, the spokesperson said. Ardian will begin work in early 2023 to select the portfolio companies to trial the Ownership Works model.

“We see our commitment to reward employees of portfolio companies as an important element of our license to operate,” said Thibault Basquin, deputy head of Ardian’s buyout strategy, said in the statement.