The world’s biggest private equity firms have joined forces to create a pan-European charitable foundation as part of a drive to counter criticism about excessive pay. KKR, Blackstone, Texas Pacific Group, Bain Capital and Permira are among the eight founding trustees of the new Private Equity Foundation. The new foundation made its first grants at the end of January.

In total, 29 private equity groups across Europe have backed the foundation. There are also 42 advisers to the industry supporting the foundation, such as legal advisers, management consultants and due diligence firms. The main protagonists are believed to have committed an initial sum of £5 million to it, with several times that amount expected to be raised annually once the foundation becomes established.

The Private Equity Foundation (PEF) is expected to focus on helping the underprivileged, with a particular emphasis on education and children’s charities – an expectation that was borne out by the first round of five grants. Of these four went to UK children’s charities Community Links, the NSPCC, ThePlace2Be, and Volunteer Reading Help. The fifth went to Impetus Trust, a pioneer in venture philanthropy in the UK, which will partner with PEF to bring its expertise to one or two charities in PEF’s chosen sectors.

New Philanthropy Capital worked with PEF on the selection of the charities and is also supporting the day-to-day management of the foundation. The charities were chosen because of their track record in improving the lives of vulnerable and disadvantaged children and their families.

The private equity groups believe that by harnessing their joint resources they can make a greater impact and hope the new foundation will become the main fundraising vehicle for the private equity industry in Europe. The groups also plan to work with charities to advise them on how to make the most impact and run their operations in the most efficient way. The foundation is expected to be selective about the charities that it works with, applying the principles that private equity firms adopt when choosing their investments.

Source
Sunday Times, 14 January 2007
ThirdSector, 31 January 2007