The embodiment of private equity’s generational shift

A conversation with two Rubensteins shows how the industry changes, and how it stays the same.

Conventional wisdom has it that the younger generation wants more than just financial returns from investment; it wants to have a positive impact. If this is the case, then having a conversation with Ellie and David Rubenstein is like witnessing the evolution of the private equity industry made human.

Ellie Rubenstein is one of three founders of Manna Tree, which has raised more than $560 million and made 11 investments. Her father, David, is one of three founders of Carlyle and arguably one of the most recognisable faces in private markets.

This week I spent some time with both private equity professionals at a Manna Tree’s Global Finance Forum in Zurich, Switzerland.

Manna Tree is built on a thesis of improved human health, specifically through investment in the food system. It doesn’t call itself an impact firm, but a great deal of the conversation on the day centres around ESG and H (the additional “H” is for health) and the UN Sustainable Development Goals. The firm is about to release its first impact report. Manna Tree is staffed by people, says Rubenstein Junior, who are personally passionate about the cause. A private banker tells me over lunch that rumours of a daily 6am staff workout are true: he has done one.

I ask the father-daughter duo whether there is tension between an investment proposition built around passion and purpose, and a room full of investors interested primarily in risk-adjusted returns. Ellie Rubenstein’s response focuses on deal origination and working with equally passionate company founders; they want to know that if they sell to a private equity firm, their principles and product are not going to be compromised.

David Rubenstein’s answer takes a different tack, recounting the evolution of sustainability in private equity from its early days (“historically private equity people were obsessed with one thing: rate of return… that’s it”), through the arrival of concessionary returning impact investors, to where we are today, for which he defers to David Blood, the founder of Generation Investment Management (and a neighbour of the Rubensteins), whom David has interviewed for an upcoming book. “He describes how the world has changed and that people now think that ESG factors give you better returns. It’s a big change,” Rubinstein says.

The elder Rubenstein is known in the industry as a globe-trotter, famed for helping build Carlyle by spending most of his days jetting between investor meetings. “We used to call it the forced march through Europe,” says Ellie Rubenstein, recalling “a tradition for our family” of joining their father on the fundraising trail.

Ellie Rubenstein has assumed a similar investor-facing role among the three founding partners at Manna Tree (although she is quick to point out the importance of teamwork, and her responsibilities in other areas of the business). In fact, it is Ross Iverson, Manna Tree’s CIO, who has his family in tow for the firm’s current European tour, which takes in a number of private equity-focused events.

The younger Rubenstein’s early reference onstage to the number of days per year she spent on planes has a familiar ring to it. Clearly some things in private equity remain constant.