In this episode, Ross Butler talks to Karen Sands, COO of Federated Hermes Private Equity which manages some $6bn of AUM. Karen provides insight into Federated Hermes’ shift into private markets, their strategic focus on ESG, and her role in managing operations. They explore the importance of scalable infrastructure, the evolving investor landscape, and the operational challenges faced by private equity firms today.

Detailed Insights:

Federated Hermes and Private Markets:
Federated Hermes transitioned into private markets in 2018 when it acquired Hermes, positioning the firm to grow its ESG and private market offerings. Karen explains that while Federated Hermes had roots in mutual funds and money markets, the integration of Hermes has helped them expand into lower mid-market private equity.

The COO’s Role in Private Equity:
Karen highlights that, as COO, her responsibility extends beyond back-office functions. She collaborates closely with the investment and sales teams, ensuring infrastructure is aligned with investor needs, fund performance, and operational efficiency. The operational backbone is critical to delivering first-class service and maintaining investor trust.

Importance of Data-Driven Operations:
Karen emphasizes the need for a robust, scalable infrastructure. Federated Hermes uses a “target operating model” that integrates data from various systems, providing a comprehensive view of fund-level, asset-level, and investor-level information. This enables the firm to be nimble in responding to investor queries while maintaining efficiency.

Risk Management and Investor Relations:
Operational risk, liquidity management, and transparency are top priorities for Karen. She discusses the importance of having systems in place to handle investor demands, manage cash flow, and ensure the firm’s resilience against macroeconomic shocks like the recent Silicon Valley Bank incident.

Emotional Intelligence in Leadership:
While strong analytical skills are essential, Karen underscores the value of emotional intelligence and relationship-building in leading operational teams. For her, fostering diversity of thought and nurturing strong, empathetic leadership are key components of success.

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Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:

Katie Mitchell
katie@linearb.media
Linear B Group