Three Dutch women are raising their own private-equity fund with what they say is a unique strategy: investing in companies where at least a quarter of the management are women to tap under-appreciated talent.
Desiree van Boxtel, a former venture-capital executive at ABN Amro Holding NV, started Karmijn Kapitaal in 2010 with Cilian Jansen Verplanke and Hadewych Cels. The fund has already attracted almost 50 million euros ($66 million) from backers including the European Investment Fund, and last month bought a majority stake in Marlies Dekkers, a lingerie brand favored by celebrities including Lady Gaga and Sarah Jessica Parker.
Karmijn is betting companies with a balance of sexes at the top produce better returns and avoid reckless risks, and will gel with an all-female private-equity ownership team. They cite research from McKinsey & Co., which found in a survey of 279 firms that companies with the highest share of women in their executive committees made a 41% greater return on equity than those with all-male boards.
“Our goal is not to serve the cause of women,” Van Boxtel, 44, said in an interview from her Amsterdam office. “We are convinced that companies with gender-diverse managements, on average, simply perform better.”
After three investments in 16 months, the pace of deals is accelerating for Karmijn, which means “crimson” in Dutch. As many as three more transactions will follow before 2013 is over, Van Boxtel said, as the fund sifts through about 10,000 Dutch companies with the right gender balance.
Women hold an average of just 9.9% of the senior roles at European private-equity firms, according to London-based research provider Preqin Ltd., making Karmijn’s pitch to investors unusual. Jansen Verplanke, 48, spent almost 20 years in private equity and commercial banking at ABN Amro and Rabobank Groep, two of the largest Dutch lenders. Cels, 43, managed ventures in the software and airline industries.
Van Boxtel says Karmijn’s genesis came from a female recruitment executive who told the founders board-level women were jumping ship from companies when a takeover loomed. Instead of considering making their own management buyout, women felt they lacked the courage, risk appetite or network, she said.
“If it is indeed the case that you have women leading a company who are not comfortable sparring with private-equity funds that are usually driven by 40-year-old alpha males, and would much prefer to talk to a woman, then there is a market,” said Ludovic Phalippou, a lecturer in finance at Oxford University’s Said Business School.
Van Boxtel says women’s natural conservatism reins in men’s greater tendency to take risks. Women also tend to care more about their employees’ happiness, resulting in a better workplace, she says.
According to research from Preqin, Karmijn is one of only five private-equity funds, cumulatively looking to raise an aggregate of $786 million, that are currently placing money with gender as some aspect of their strategy. Preqin includes firms allocating some of their funds to a “special interest” or diversity category that includes investments in companies run or managed by women.
When Karmijn pitches to investors, it also cites Catalyst, a New York-based research and advocacy group for women executives. The group said in a 2011 study of Fortune 500 companies that firms with at least three women on the board for at least four years had an average 60% higher return on capital on average than those with no female directors.
Some 71.9% of the total Dutch female workforce was employed in 2012, above the 62.3% proportion for the European Union as a whole and up from 66.9% in 2004, according to the EU statistics agency.
Supporters of Karmijn include the European Investment Fund, which has invested 11 million euros so far and is owned by the European Investment Bank, the European Commission and a group of lenders. The EIB is the EU’s project-finance arm, and only lends to money-making ventures. The EIF provides debt and equity finance to smaller companies.
“The European Investment Fund does not have a specific mandate focusing on gender-diversity projects,” Joelle Harvey, a spokeswoman for the Luxembourg-based fund, said by e-mail. Gender diversity “is an innovative strategy, providing Karmijn with a differentiating and competitive advantage,” she wrote.
Half of Karmijn’s investor base consists of women, according to Van Boxtel. She also says the apparel industry has been a source of capital, not just investment targets.
“Investors don’t even talk to us to begin with if they don’t believe in diversity,” Van Boxtel said. “We have quite a few investors from the fashion industry, possibly because diversity is normal in that segment.”
The founders have similar home lives: all three are mothers of two young children with working husbands and an au pair to help. Operating a business is probably better than a banking career for balancing family with work, Van Boxtel said.
Mindful that too little male input may be negative, they’ve brought in a man as their fourth full-time employee, and say they prefer to hire male interns.
The fund, which intends to make eight to 10 investments over five years, targets returns of more than 25% for each company in its portfolio. In December, Karmijn bought a minority stake in YouMedical, a seller of over-the-counter personal-care products. That followed its first deal, a majority stake as part of a management buyout of Enrico BV, which imports Mediterranean foods for supermarkets and wholesalers.
Heleen van Gulik, hired by Karmijn to be Enrico’s chief executive officer, says she’s already noticed a difference working with female investors for the first time in her 25-year career.
“The women of Karmijn understand the need for acknowledgement” a female executive may have, Van Gulik said. “I left any reserves on working with male bankers or investors behind me a long time ago. It’s not about being too shy to work with them. The point is more that I find this more agreeable.”
Marlies Dekkers’s lingerie label was declared bankrupt on Aug. 21 after suffering during Europe’s economic downturn. Karmijn subsequently bought parts of Dekkers’s MD Group BV holding company out of administration.
The firm paid about 5 million euros for Dekkers’ brand name and stock, administrator Christiaan Groenewoud said by telephone today. The Dutch website Retailnews.nl reported the amount earlier.
Karmijn will close six of 12 stores, fire 65 of the firm’s 100 employees and focus on Internet sales to turn the business around. Dekkers will remain involved in the company she founded, with a seat on the management board, in keeping with Karmijn’s vow to retain female talent.
“They are not a philanthropic institution,” Enrico’s Van Gulik said. “They are a private-equity fund that has to score, and this is their strategy to do so.”