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Illustration: Aïda Amer/Axios

Private equity funds should incentivize larger numbers of portfolio company employees, because it will better align interests and improve investment performance.

  • I've been writing that for years, but now it's also being said by limited partners in private equity funds.

Driving the news: Coller Capital this morning released its biannual "Private Equity Barometer" survey of more than 100 global LPs. Its lead finding was that 46% of respondents believe the likely effect of incentivizing more portfolio company employees would be to increase returns.

  • Only 6% said they believe it would decrease returns. The rest didn't know.
  • It's worth emphasizing that these LPs are true believers in the private equity model, with a whopping 89% saying that small and mid-cap companies would benefit from at least a period of PE ownership.

This isn't a novel idea. KKR, for example, for several years has provided equity incentives to rank-and-file in some of its industrials companies (and has sought to expand the practice). Other firms have begun to selectivity follow in its footsteps.

  • The basic argument is that it's good business, because it improves employee morale and reduces turnover. It's also good PR in an ESG-obsessed world, and could help seal new deals with company founders who are interested in their employees' future wellbeing.

The bottom line: Limited partners pay the private equity bills. If they truly believe employees are vital stakeholders, and should be treated as such, it's time to share those convictions directly with general partners during the fundraising process. Surveys are a start, but not an end.

Quasi-related breaking news: Coller Capital is on the block, per Reuters.

Go deeper

Kemp proposes $5,000 pay raise as employee turnover hits record high

Photo: Elijah Nouvelage/AP

Gov. Brian Kemp wants to give full-time state agency employees a $5,000 pay bump, plus other perks, to boost a workforce experiencing a record-high turnover rate.

Why it matters: Well before the Great Resignation, state employees have been fleeing their jobs, hamstringing the ability of Georgia government to serve the public.

Dan Primack, author of Pro Rata
50 mins ago - Economy & Business

Peloton's wild ride and possible buyers

Illustration: Megan Robinson/Axios

Peloton is having a bumpy ride, and has become a source of fascination among even those who've never invested or clipped in.

Driving the news: On Monday, a hedge fund with less than a 5% stake in Peloton called for CEO John Foley to be fired and for the connected fitness company to consider seeking a strategic buyer. Shares gained nearly 10% on the news, but remained down 16.2% for the year and off 80% their December 2020 peak.

Scoop: Republicans probe NBC over Beijing Olympics coverage

Photo: Oscar del Pozo/AFP via Getty Images

Republican leaders on the House Energy and Commerce Committee have sent a letter to NBC Universal executives voicing concerns about "the extent of influence the CCP (Chinese Communist Party) may have over NBCUniversal’s coverage of the games."

Why it matters: The human rights abuses committed by the CCP have been the subject of intense scrutiny ahead of this year's Winter Games in Beijing. Activists last year sent a letter to NBC executives urging the network to cancel plans to cover the Olympics.