Dunya Bouhacene is an independent private equity investor, Women Equity does not only generate market performance, it is also contributing to a better distribution of roles and economic power in society. To better serve this mission, in 2009 Dunya and her team launched the NGO Women Equity for Growth, which supports the development of a new kind of finance and entrepreneurial models.
What is the role of Women Equity?
Women Equity provides support to portfolio companies which are either women-led or have a gender balanced management. We are convinced that economic performance combined with social responsibility creates sustainable value for all stakeholders. To increase the visibility of these companies, our work is supported by the Women Equity for Growth not-for-profit platform, which facilitates the work of researchers in this domain, spreads know-how and nourishes a networking platform for women entrepreneurs.
What are the main outcomes of the work carried out by Women Equity for Growth?
Thanks to the Women Equity Scientific Council, an advisory board made up of 10 leading researchers from the USA, UK, France, Denmark, Italy and Finland, we succeeded in designing the Women-Equity Index, among others. This index is a database which gathers financial data over series of three years, on 40K SMES with revenues ranging from €4mil to €100mil, and having between 20 and 250 employees. Thanks to it, we can measure what we call the ‘over-performance’ of women-led growth companies in France. Given that these companies are much less visible among traditional business networks, it is quite impressive that they can still manage to generate more revenues.
The platform plays two other important roles: communication and networking. The work carried is disseminated through a dedicated portal and through a variety of other types of initiatives set out with media partners or other networks.
Furthermore, an Advisory Committee comprising directors and well-known executives of large groups from various sectors serves as a valuable resource for the investment team during its due diligence phase and enables the sharing of contacts, expertise and experience among the management teams of our portfolio companies.
What differences can you see between women-led and men-led businesses?
Differences can be seen in terms of results, which can be better than those of traditional businesses, but also in terms of access to finance, for which women-led businesses may need some extra help.
First, Library House – Dow Jones shows that, out of 600 Private Equity backed European companies, those led by women demonstrated higher capital efficiency, requiring 35% less capital to generate 12% more revenues.
Our own research on 40,000 French SMEs with revenues above €4mil has shown that the 5,000 women-led companies (Chairpersons and CEOs) were more resilient during the crisis. A majority of them even maintained growth. Moreover, their revenues and their profitability declined less than their sector competitors.
Second, access to private equity financing is very limited for these companies. As an illustration, the proportion of private equity backed women-led companies is significantly inferior to the proportion of women-led companies in the economy: they represented less than 4% of small and mid-market transactions in the past ten years.
As such, women SMEs private equity gap occurs not because of their attractiveness, but because obstacles still remain in many Western countries, including France. Women-led growth companies are less visible, their leaders are less integrated in traditional business networks, and the prevailing socio-economic models work less in their favour.
What solutions do you see to increase investments in these high-growth businesses?
There are a number of actions to support these businesses which can be set in motion at different levels.
As a tier 1 stakeholder, Women Equity works on two directions. First, we aim at raising awareness among investors re the high performance of enterprises with a higher gender mix. Second, our concerns include developing women’s understanding of and familiarity with private equity.
At general public level, it is key to promote success stories to all types of audiences. Each year we cooperate for instance with the French financial newspaper La Tribune for the Women’s Awards with the objective of identifying, selecting, and promoting exceptional female CEOs and executives. Finalists benefit from strong media coverage.
The public authorities could also jump in by adopting incentives to encourage the development of socially responsible investment (SRI) funds. Inserting SRI criteria in the asset allocations of public institutions, and notably gender balance assessments, would accelerate the emergence of these new business models. This should be a key concern for governments, particularly in the current economic and financial context.
Can you share an example of a women-led company that succeeded through Women Equity?
In October 2011, Women Equity Partners announced the closing of the Management Buy-Out of Lefebvre Software in partnership with CIC LBO. Viviane Chaine-Ribeiro took over the management of the company at a crisis time. She succeeded in growing revenues, which stood at €16m in 2007, to more than €40m in 2011 and in transforming the company into one of the leading enterprise software providers on the French mid-market. The fruitful partnership between the CEO and shareholders enabled the company to grow faster, with a series of acquisitions being considered, the latest occurring a few months ago. Thanks to the visibility gained through the Women Equity Program, Lefebvre Software is a growing company led by a woman with very high ambitions for 2017.