When Livingbridge managing partner Wol Kolade entered the finance industry in the early 1990s, he faced "in some cases overt and quite aggressive racism." He worked with a management team whose CEO, rather than refer to Kolade by his name, "would instead use a racially offensive and derogatory term," he wrote in a letter to his investors following the killing of George Floyd and the subsequent civil unrest.

While the industry over the past 20 to 25 years has "got better," Kolade told S&P Global Market Intelligence in an interview, he said in his letter "we still have a very long road to travel."

Gender diversity, which has been pushed by programs like Level 20 and included in the agenda of U.K. industry lobby group British Pvt. Equity and Venture Capital Association Ltd, or BVCA, "really has helped" because it has moved the asset class on from the white male stereotype, he said. "Once you get on this train, in my view, you sort of move towards, hopefully, a very good destination. You can't row back and that's the key thing."

In his letter, Kolade said representation of BAME leaders in private equity remains "shockingly low."

A 2018 study by New Financial found that there are 12 Black portfolio managers in the entire U.K. investment management industry, but "the shame in private equity is that we don't even know that number. We don't collect that," Kolade said in the interview.

By his and Livingbridge's own rough estimates, triangulated with the BVCA, Kolade calculates of the 3,000 to 4,000 private equity investment roles, about 1% are held by Black portfolio managers. "The conclusion we came to was, let's say, we're 100% wrong. ... You're still somewhere like 2%. The answer is, yes, we're starting from such a low base. Frankly, we've got a lot of work to do."

Kolade's letter attracted the attention of several of his peers, including Jonathan Sorrell, president of alternative investment management firm Capstone Investment Advisors LLC. The pair discussed ways to tackle the issue in the U.K. investment management industry.

"The idea was to feed the system from the bottom and give the people, who would not have otherwise thought about the industry or considered it to be accessible, that entry point," Sorrell said.

Without a reasonable number of role models, young Black people considering their career options "wouldn't necessarily think that [private equity] is somewhere that looks for them." It seems very complex, very difficult to understand, Kolade added.

With these goals in mind, the pair — along with Dawid Konotey-Ahulu, co-founder of Redington Ltd. and Mallowstreet Ltd., and Michael Barrington-Hibbert, founder and managing partner of Barrington Hibbert Associates Ltd. — established #100BlackInterns. Public and private U.K. investment managers signed up to the program will offer at least one internship to a Black graduate, for a minimum six weeks, paid at the London living wage or higher, in summer 2021. The program is open to graduates from a range of universities and academic disciplines and had received over 900 CVs by Sept. 10. The program will also hold an advisory call in September, which will help with resumes.

The program has received significant interest from firms, and it announced Sept. 9 that it would cap the number of participating companies at 200. At the time of writing, 185 firms had signed up, according to #100BlackInterns' website.

Participating firms will oversee the selection process, and in the third phase, #100BlackInterns will provide a training program for successful applicants and work with firms. It aims to cross-fertilize the "experiences, understanding, between firms … so that everyone gets pulled up to the level of the best rather than it being a completely variable, completely random experience for people," Kolade said, adding some firms are further ahead in this than others.

Unknown numbers

S&P Global Market Intelligence reached out to 31 private equity firms that had signed up to 100 Black Interns as of Aug. 27, to request data on the number of Black people in their U.K. investment teams, the size of those teams, and the number of internships they planned to offer. Just one firm, turnaround investor Alchemy Partners LLP, responded with complete figures: Given the size of its investment team — 21 people — it hopes to accommodate up to two interns at a time. It does not have any Black people on its investment team.

It did not provide further breakdowns, but Mayfair Equity Partners LLP also said it has agreed to take two interns. Coller Capital Ltd. also said it had been offered one internship by the program. Some firms indicated they may make the requested information available in the future. Others said they were finalizing the number of interns they would take on.

We also asked firms to comment on their signing up to the program. Those responses can be found it the boxout accompanying this story.

Kolade believes it is crucial that firms start collecting such data, adding that before Level 20 was founded in 2015, "we weren't really counting the number of female people in front-line roles, and now we do." The industry can now measure progress going forward.

Lack of diversity and opacity on the subject have business implications. Limited partners are questioning those private equity firms they commit capital with, Kolade added. "This is an important thing that we need to be able to talk about."

Firms face difficulties around General Data Protection Regulation legislation and personal information, Kolade said. A number of U.S. LPs, for example, are asking for this information. Staff must be asked to fill out their ethnicity; the firm cannot decide that. "There's no obligation in Europe or in the U.K. to do that. So we're saying to LPs, look, we can't formally give that information, you decide."

To get this information, the industry needs to do "a bit of work," Kolade said, and — after initial discussions following the launch of #100BlackInterns — the BVCA is committed to working out how to do it, he added.

"A lot of people were caught off guard by the strength of the global reaction to the tragic and horrific death of George Floyd, and what that unleashed in terms of putting anti-racism on the map," Kolade said. This is reflected in the quick response to #100BlackInterns, Kolade said, with companies asking how they can help and how they can collect data.

Starting with four senior individuals in their respective sectors calling up people they knew to make things happen, Kolade said the program has "actually come to fruition in a really pleasing way." The real test, he says, is whether the program makes a "meaningful change" to the "trivial numbers" the industry counts across the next 10 years.