Listed private markets firm Partners Group has joined the small group of firms to extend equity ownership to employees of portfolio companies. As part of a pilot programme – now complete – the firm established an employee incentive programme at German toymaker Schleich, the firm wrote in its annual corporate sustainability report.
Every employee at Schleich, an 87-year-old maker of toy figurines which Partners Group acquired from Ardian in June 2019, has been given the “opportunity to invest in the company and benefit from the value creation and financial upside”, the firm said.
Further details have not been disclosed, but the move is part of Partners Group’s “Stakeholder Benefits Programme”, an initiative to “reinvest substantially” in portfolio company employees’ development, wellbeing and financial situation. The firm gives a separate example in its report; at US company Eyecare Partners, which Partners Group acquired in 2019, it has established a benefits package “with a focus on health insurance premium costs, and a career institute with training and staff support for further education”.
Partners Group’s stakeholder programme has now successfully concluded the pilot phase, André Frei, chairman of sustainability, said in conference call this morning. The next step, he said, is to formalise the programme into a systematic framework that can be rolled out accross the rest of the portfolio. “It’s a multi-year effort”, he said, noting that each company will tailor their own benefit programmes.
The idea that all employees at a portfolio company participate in the equity upside of a private equity buyout is a novel one, but a small handful of firms is experimenting with the concept. New York-listed firm KKR recently confirmed that every company in which its $19 billion North America-focused private equity fund takes a stake will implement an employee ownership programme. European firm Ardian has undertaken similar initiatives.
Partners Group’s 80-page annual corporate sustainability report was published 3 May. Here are some other points of note:
- On compliance and “greenwashing” risk: The firm plans to roll out mandatory annual employee training on ESG to “adhere to regulatory requirements, ensure relevant client communication and manage greenwashing risks.” The report states: “In 2022, we plan to further formalize these education sessions within our client solutions departments and integrate them as mandatory annual trainings. In a second step, we re-trained our compliance department on ESG and greenwashing in order to raise awareness for these risks within the standard marketing material review processes. Finally, we formulated processes to ensure that marketing materials and product presentations are regularly reviewed by the sustainability team to ensure transparent and consistent communication.”
- On EU SFDR classification: The firm has opted to classify all its funds as Article 8 rather than the more ambitious Article 9. This is because there is a “lack of completeness” in the EU’s definition of sustainable assets in the EU Taxonomy.