Just like the rest of finance, private credit has a gender problem
- Shubham Saharan
- +Rosa O'Hara
This article is part of our forthcoming service, 9fin Private Credit. If you're interested in a free trial, contact firstname.lastname@example.org
Private credit may be the ‘hot new thing’ on Wall Street, but data shows that it’s suffering from one of the oldest problems in finance — a lack of gender diversity.
Just one in every four people working in private credit is a woman, according to the latest data from Preqin. That’s very slightly better than the more mature private equity and venture capital markets, but not by much.
The data also shows a bottleneck as employees move up the ranks, with the number of women in senior positions falling far below the 24% overall statistic. Women occupy 34% of junior roles, but only 16% of senior roles.
There could be non-gendered explanations for this attrition. After spending a few years in more structured entry-level junior analyst and associate programs, many employees — both male and female — lose out to promotions or choose to enter other industries.
Still, the bottleneck data suggests that companies could do more to foster diversity in senior positions. And there is other data in the Preqin report that is worth considering alongside the seniority bottleneck: for example, the fact that women are underrepresented in certain teams or departments.
As you can see from the chart below, there are far fewer women in investment teams or portfolio management positions than in areas such as investor relations or marketing.
We wanted to figure out what is causing these imbalances, and how they might be fixed, so we spoke with nearly a dozen women from some of the largest private credit firms in the US market.
One theme kept coming up: institutional support. In a nutshell, it’s not enough to rely on gender imbalances to correct themselves, and companies can do a lot to level the playing field and make career progress more equitable.
Some of them are already taking action. Lauren Krueger, who joined KKR in 2018 and is now a managing director and co-chair of the firm’s private credit portfolio monitoring committee, said that earlier in her career, institutional support “didn't exist to the same extent that it does today.”
Here are five initiatives — some of them institutional, others more personal and informal — that the women we interviewed said could help foster gender diversity in the industry.
1. Hiring more women for junior roles
It might be obvious, but one of the most important things that can help women get to more senior positions is recruiting more women into junior roles.
Firms like Morgan Stanley, Oak Hill Advisors, Ares Management and Oaktree Capital have partnered with non-profit organizations such as Girls Who Invest to recruit more women into their internships and junior ranks. Morgan Stanley also works with non-profits like Black Women in Asset Management and Girls Who Code.
“You have to invest in hiring women and diverse talent at more junior levels, and mentoring them throughout their careers,” said Richa Tandon, a managing director at Benefit Street Partners who has been at the firm for nearly 10 years. “I'm a good example of it.”
Benefit Street has made it a requirement to include at least one woman or diversity candidate in every primary interview round.
2. Providing mentorship opportunities
Many of the women we spoke with pointed to mentorship networks and women’s groups as a crucial part of how they built support systems and bolstered their career development.
“Having a support network is something that you have to think about strategically,” said Damayra Cacho, a partner in the investor relations team at Ares. “What I cannot underscore enough is how important it is to have mentors in your career, and people who will help create opportunities for you.”
Christina Lee, a managing director and assistant portfolio manager at Oaktree, suggested dividing mentors into different buckets: ‘challengers’ who pose different points of view to their mentee; ‘supporters’ who you can turn to for encouragement; and ‘pushers’ who encourage you to take the next step in your career.
At Carlyle, employees can tap into the firm’s Career Strategies Initiative. This program matches high-performing women, vice presidents, and principals from underrepresented backgrounds with career strategists and executive sponsors, to help boost their career momentum.
"It's your job as a sponsor to figure out how you can help [your mentee] navigate the organization and find opportunities elsewhere, to get that exposure and grow and really be viewed in a different capacity," said Catherine Verri, a managing director on Carlyle’s investor relations team and part of the inaugural Career Strategies cohort.
It’s not just top-down mentorship programs that are helpful, however. Informal support networks can assist junior women at large firms.
"What's been the most influential in my career is informal mentorship,” said Jean King, a principal at Oak Hill. She said she sets up coffee meetings with junior women on the investing team (at least one a month) to enable an “open line of communication where I'm not their boss.”
3. Support with parenthood and family
Another career pinch point can be starting families, or taking care of loved ones. For many of the women we spoke to, having a child has been the moment they saw some of their peers exit the pipeline towards more senior positions.
“It gets to a point in a woman's career where oftentimes they may think, ‘I'm not sure that I will be supported when I’m ready to also have my other career at home, and start a family to build that part of my life,” said Cacho at Ares. “Will I be treated equally?”
“What people forget is that just like men, women want real leadership opportunities, meaningful work that they're passionate about, and equity,” she added. “For that, some firms are better than others.”
Countless studies have shown that women tend to take on the majority of household responsibilities and childcare. Here’s one of them:
Multiple firms we spoke to for this article have flexible maternity leave policies, with some also offering fertility benefits and hosting parent support groups. Oaktree, for example, offers help with providing childcare for its US employees, and some of its team in Europe.
Over at Benefit Street, Tandon was assigned an executive coach to work with her throughout her pregnancy, maternity leave, and return to the office. She said the coach was instrumental in ensuring she didn’t lose ground professionally during that time.
“What do you do with your clients when you're on maternity leave?” she said. “Do you give them to somebody else? Do you keep them? Do you still answer emails? If you give them to someone else, how do you make sure that you get them back?”
According to Verri at Carlyle, preserving the employee’s space for when they return is also incredibly important: “It takes some time to get back up to speed, but ensuring that role is exactly how they left it, and that they've got a spot on the team when they're back, is really important,” she said.
4. Creating a culture that values diversity
Having a diverse culture is more of a result than a solution in and of itself; a goal to work towards as opposed to a way of getting there. But a good place to start in creating a diverse culture is to have (and maintain) a diverse leadership team.
Nicole Drapkin, a portfolio manager at Blue Owl, was one of the firm’s first employees — way back when it was called Owl Rock.
"There's always been this top-down focus on making sure people were being represented,” she said of Blue Owl. “Leadership has been focused on trying to hire under-represented people into leadership roles, and retaining that level of talent to ensure they continue to advance within the company."
Sources told us that at some other firms — including Carlyle, Oak Hill and Oaktree — commitment and contribution to diversity, equity and inclusion initiatives are part of employees’ performance reviews.
5. Bridging the gender gap socially
Finance is built on relationships, and relationships take a lot of legwork. For one thing, they generally require finding common ground — and it can be hard to build those bridges if you’re not part of the dominant social group.
For Laura Holson, chief operating officer at New Mountain Capital’s credit business, finding common territory with male colleagues was a challenge when she began her career. Now, it’s one of the things she most frequently advises her mentees to do.
“Those informal conversations were what I found difficult or more stressful,” she said. “I've been able to develop relationships by finding other areas of similarity. You can still find ways to connect, even if it's not necessarily over the sports game.”
But that doesn’t mean that all stereotypically male activities automatically push women to the sidelines.
"If you don't want to participate because it's not authentic to you, you still need to put in the time in other ways to build those similar relationships because that's important to the fabric of our industry,” said Dev Vallabhaneni, a managing director at Antares Capital.
“Another piece of advice that I give is that it's not necessary to do everything, but find ways that you can be authentically yourself within the spaces where you choose to be.”
And here’s one final piece of wisdom from Grishma Parekh, a managing director and co-head of North American core senior lending at HPS:
“I made it a professional priority to stop and ask myself at various junctures in my career: are more doors open for me today than a year ago? And will the organization that I am working for, and the people I am working with, allow me to walk through them?”