OTPP spinout Peloton targets global expansion at Glass Lewis, CalPERS exec is SPAC-wary

Peloton Capital acquires Glass Lewis and CalPERS is wary of SPACs' frenzy.

Morning!

It’s no news that ESG is among top priorities for private equity groups these days. But now we’re seeing that there’s also ways to invest behind its increasing importance in the broader ecosystem.

Peloton Capital Management, the firm told PE Hub, sees a big opportunity to boost international exposure at the newly acquired Glass Lewis, as the second-largest proxy company after ISS witnesses growing demand for its ESG advisory and data services.

The firm, formed by veterans of Ontario Teachers’ Pension Plan more than two years ago, bought a majority stake from the investment team’s former pension fund employer in an all-equity deal. (ICYMI, Genstar Capital sold a majority stake in ISS last year in a $2.3 billion deal.)

Investors’ growing reliance on proxy companies to advise them on ESG matters at board meetings was a key driver for this deal. “We think corporate governance has become increasingly important,” Steve Faraone, managing partner at Peloton, told PE Hub. “It’s gone from compliance to something that’s more important. We anticipate the need for this type of research to be even greater.”

Peloton plans to leverage this accelerating demand at Glass Lewis by penetrating the European and Asian markets. Read Karishma Vanjani’s full report for more the firm’s strategy.

Not buying it: We’ve got SPAC lovers, SPAC haters, and everything in between. California Public Employees’ Retirement System, the US’s largest public pension, is wary of the special purpose acquisition company phenomenon.

“It’s certainly something we’re keeping our eye on, but we certainly have reservations about it,” Dan Bienvenue, interim chief investment officer at the pension giant, told its investment committee meeting on Monday.

“As far as what the future holds, if you ask the CEO of Goldman Sachs, he thinks it’s overblown. If you ask the CEO… of a European bank, they’re going all in. Probably, we are in between. So, it depends on who you ask. It’s certainly something we’re keeping our eye on.”

Steve McCourt, co-chief executive at investment consultant at Meketa Investment Group, said SPACs provided another source of investment capital that “bid up the prices of private businesses.”

This year is set to be an ultra-competitive environment for PE firms, with half of the capital raised for SPACs chasing the same deals as buyout shops, according to estimates from Bain & Co.

Read more on PE Hub.

That’s it for me today! Enjoy the rest of your week, readers, and as always, hit me up with feedback, tips and your two cents on SPACs at springle@buyoutsinsider.com.