SS&C Technologies Holdings, Inc. (SSNC) Earnings Call Transcript & Summary

Hello, everyone, and welcome to today's webinar. I will be your Zoom operator assistant for the session. Today, we are presenting SS&C dialogues, what are the new parameters of value, moderated by Kamran Anwar, Managing Director at SS&C Technologies. Before we get started, I will go over a few housekeeping rules. First thing, today's webinar is being recorded. [Operator Instructions] And finally, this webinar presentation and discussion are off the record. We request that no person or firm is attributed with specific quotes. I will now pass this over to Kamran, who will also introduce today's distinguished speakers. Kamran, over to you.

Thank you, operator. Ladies and gentlemen, on behalf of my colleagues and my partners at SS&C, and especially on behalf of Bill Stone, Founder and CEO of the company, welcome, and welcome back. For the last couple of times, we have had the pleasure of hosting a number of panelists. We have discussed broad subjects, such as private equity, where we had 3 founders. We convened leaders from the IMF, IFC and a senior political economist to discuss the state of the world economy and how the multilaterals are responding. At this particular webinar discusses a slightly more amorphous topic, that is the idea of value. And how should we think about value in terms of its drivers as well as its destroyers. This becomes especially relevant as we are inheriting a world shaped by remarkable confluence of a healthcare, economic, and unfortunately, a human rights crisis. This arrived in this world with ferocity and scale that we have not witnessed before. It is, therefore, logical and incumbent on companies and stakeholders in this space, bring to you various narratives and thinking that revolve-around concept of new creation and ask ourselves some questions. What are the new parameters of value? What are the lateral ideas to inform the concept of value? And how do they relate to some of the more linear traditional paradigms of value? Do we need to explore new engagement models internally, externally? And how do we create a sustainable long-term value for our companies, for our world, for our employees and for us, as business people. And finally, do these shifting tides mean shifting stakeholders? Do they mean shifting priorities and have they unlocked new chorus of principles, demands and needs that the world must respond to. SS&C dialogues is our humble attempt to bring to you considerate opinion and thinking from leaders in their fields of endeavor. So our own thinking might be shaped and broadened and our own horizons might be influenced by a variety of different narratives and thinking on this subject. Our audience comes from 30 countries today and a whole mixture. So a large majority is private equity and asset management. But as always, we are proud and delighted to welcome members of the civil society who we believe ought to be a part of this dialogue. There are Artists, scholars, scientists, students on this call, including distinguish leaders and ambassador and a finance minister excellencies. Thank you for joining and putting this trust in SS&C by taking the time out, each of you from your incredibly busy schedules. Analyze these concepts, ladies and gentlemen, we need to think about value of different streams of consciousness. There is certainly a business stream that we are used to, but there are other streams, and there are other ways to think about value that co-inform each other, and that is the purpose of today's webinar. And I'm very pleased to be able to host and convene a set of leaders from 3 very different disciplines to share their perspectives, experiences around value. First, we have got Jens Hofma, who is the CEO of Pizza Hut restaurants in the U.K. He led the management buyout of Pizza Hut in the U.K., along with his senior management team and runs a business of 250 Pizza Hut restaurants and 6,000 employees. When he's not busy discharging his considerable responsibilities as a Chief Executive of Pizza Hut, he incognito also waits tables at Pizza Hut's restaurants. And how inspiring is that, stay close to his clients and to his employees, and we look forward to exploring this some more with him. Previous to joining Pizza Hut, he has had senior roles at Nestlé and begins company in various European countries as a graduate of the IMD Business School in France. Hammad Nasar, the Senior Research Fellow at the Paul Mellon Center for Studies in British Art, sponsored by Yale University. He relinquished a successful career as a management consultant, if I may say, he has been a reluctant accountant and has now aged professions too over the last 15, 20 years, become a leading curator, a fort leader and a writer, also a strategic adviser to many companies. He is the co-curator of British Art Show 9, this country's largest exhibition of contemporary art organized by the Hayward Gallery. And earlier, he was the inaugural Director of the Stuart Hall Foundation in London. He is also the Chief Marketing Officer of Brainpower, an investment analytics and data management company. Last, but certainly not the least, someone I have known for a number of years and who I work most closely with is, Anne Fossemalle, Head of Private Equity Investments at the European Bank, a construction and development, leading Private Equity Limited partner working across their member countries. She is a veteran of the firm of the organization having spent 25 years there, leading their private equity practice. She is also a Board Director of the International Limited Partners Association, ILPA, as well as a Board Director of Invest Europe, which, as many of you know, is the European Private Equity Association. Anne is a recognized PE investment executive, a frequent speaker and spokesperson for our industry, and she comes with an impeccable academic background as well as a masters in economics from Stanford University. Before we commence, may I add the views or opinions expressed by the speakers are solely their own and do not necessarily represent views and opinions of SS&C technologies. Like other webinars, we will give each panelist 5 to 6 minutes to give their opening statements, and then we will proceed with some questions. In the previous webinars, we started the Q&A session with each of you a little late, but we want to start that earlier this time. So please feel free to start sending in the questions. They are at the bottom in the Q&A section, and we'll look to engage you early in this process. With that in mind, go to Hammad Nasar.

Thank you, Kamran, both for the invitation and for that generous introduction. Now when we first started planning this discussion, we were starting the conversation in response to the COVID pandemic. And we now find ourselves in a place where even that planetary phenomena has been overshadowed by the ongoing protests against racial and social inequality. Now the ferocity, which Kamran just spoke about, of these protests is a reminder if we needed reminding that our pre-COVID yesterday was not so great for many people. In fact, I would argue, for most people. And this marks the time, I suggest that where the Tachio Reagan neoliberal consensus of small governments, low taxes, unfettered markets, has run its course. The recent financial crisis, the ongoing and even more sort of impending climate crisis, the brewing trade crisis and the shortcomings that we've all seen revealed by the COVID-19 crisis, have punctured our collective belief in the market mechanism to solve our problems, and for most of us, eroded our trust in government. I'm excluding those who are joining us from New Zealand and Taiwan in this. Now this perfect storm, I'd argue, has set the scene for reshaping the social contract between the state, the corporate sector and civil society. What's public, what's legitimately private and how do we assign value and distribute them between these 2? These questions are up for grabs. The only thing that we know is that the future will not be an extrapolation of the past. It will have to be reimagined. And I want to argue for the possibility of art and for the role of artists in helping us imagine alternative, more hopeful futures. And in that spirit, I really wanted to start the ball -- get the ball going with 2 examples of artistic interventions that act as pocket utopias. So the little portals of possibility. If I can have my first slide, please? Now most of you will recognize this as the iconic Tate Modern in London. The right side, sort of the right building of the Tate opened in 2017, and it used to be called the Switch House and was renamed the Blavatnik Building to honor Len Blavatnik's GBP 50 million donation, so the largest in Tate's history. The other building, the one on the left, used to be called the Boiler House. But in 2018, as part of her commission for Tate Modern's Turbine Hall, the Cuban artist, Tania Bruguera, working with the local community, persuaded Tate to rename it. It's now called the Natalie Bell Building to honor a local social worker. This renaming was initially supposed to be there for a year. And just a few months ago, it was made permanent. So if you enter the Turbine Hall of the Tate well when it reopens, on the right side, you see a building called Blavatnik that cost GBP 50 million for that naming. And on the left, you find somebody who is honored for the work they do for the people that live in the community that Tate operates in. As an equation of value, I think that asks some interesting questions for us. My second example is, if we can have the second slide, please. So this is an initiative -- Collectivize is an initiative by the artist Jonas Staal and Lawyer Jan Fermon, and I'd encourage you to visit collectivize.org when you have a moment. It is a collective action lawsuit to force legal recognition of Facebook as a public domain that should be under the ownership and control of its users. So sort of all of us. Facebook, the artist and the lawyer argue, must be collectivized. And the basis of doing this is they are basing their sort of argument on the right to self-determination of peoples and individuals in various ways and arguing that data is now a fundamental resource. So yesterday, just to avoid the pointed fingers of being a hypocrite, I've become a cosignatory in this lawsuit which will be presented to the UN Human Rights Council in Geneva this coming September. So what this lawsuit and how effective it is, we, I'm sure, will debate later on. But what it does is it points towards an intention and idea of who owns what. And with that, I'll end my piece.

Thank you, Hammad. And next to Jens Hofma, the CEO of Pizza Hut in the U.K.

Thank you very much, Kamran, and welcome to the less highbrow world of pizza next. Just to put you all at ease, I think my belief in the market economy hasn't been punctured to quite the same extent as that of my friend, Hammad. But I just wanted to give you more of a private sector perspective on that old concept of value, and particularly from the perspective of what is a very real-life restaurant business. And when I say real life, on a typical day I could be involved in a conversation about how we can improve the load factors of our dishwashers to how do we actually structure our capital in order to support our 5-year business plan and everything that sort of lies in between. So I work in a business that gives me quite a real life perspective on value. As Kamran said in his kind introduction, I do on quite a regular basis of work in my restaurants as well, not as some sort of big PR event, but just to really understand what's going on at the front line of my business. Value, I think, has a very clear definition. When we look at it in the context of capital, as I think most of you on the call will be aware. Actually, a very large section of the economy is dedicated to defining value in the context of capital and trading in that value. However, as we sort of all know, going back to base principles, value creation in the economy is a function of capital, but also of labor. And definition of value in the context of labor is somehow much less clear, much less measurable and not really talked about anywhere near the same extent of value in the context of capital, and I think that's a huge problem. Now let me bring that sort of conceptual statement back to some sort of physical reality. And let me introduce to you a typical Pizza Hut restaurant manager. A typical Pizza Hut restaurant manager earns somewhere be between GBP 25,000 and GBP 30,000 per annum in the U.K. They tend to manage a business that has a revenue of about GBP 1 million, a profit margin of somewhere between 10% and 15%. That represents a capital investment of about GBP 1 million to GBP 1.5 million, and employees somewhere around 25 people who somehow need leadership under often quite stressful, high-pressure circumstances. That particular role, by the way, in the definitions used by some governments is a low skill role as opposed to somebody who can run an Excel spreadsheet being almost immediately being seen as a high skill role, which in itself is interesting when we think about the value that we attribute to labor. But putting just all of that to one side, how does that restaurant manager define value as part of his or her job? Well, a large part of the value of their jobs to them is a sense of belonging. Many of our restaurant managers refer to their teams as their extended family, see their restaurants as a space which gives their lives meaning, contributes to give their life meaning. It gives them a purpose in terms of serving others and in terms of helping and supporting and growing their team members. The value of that job lies in the respect that they get from the higher levels in the organization and lies into the growth opportunity -- opportunities that they are offered. The value doesn't lie into multimillion pound earning prospects or salaries of GBP 100,000 and above, the value lies in much more grounded and much more humane aspects. So looking at that sort of definition of labor value, what's happening at the moment. Well, I think there's a lot of things that are happening that we should be very worried about. I think there's a lot of jobs that are being devalued either by the way, we view them as a society, and I mentioned the example of low-skilled labor in that context. But also technology devalues a lot of roles in society, a lot of service interactions, very humane service interactions we used to have when we were traveling, staying in hotels, restaurants, et cetera, are being dumbed down through technology. Secondly, leadership practices aren't really keeping pace with what the needs are of people who work for large companies. A lot of leadership practices are still very 20th and sometimes even 19th century. CEOs tend to be much more literate, much more financially literate than emotionally literate when it comes to providing leaderships within organizations. And a huge revolution, in my view, is required in sort of quality of empathetic leadership that we deliver in organizations. There's getting huge pressure on increased labor productivity and even more so, both the 2009 financial crisis, and I would predict both the financial crisis or the economic crisis that we're about to face. And also other institutions like church, family, local communities are weakened and have been progressively weakening, placing more emphasis on the work environment as a space that gives people purpose sense of belonging. Ignoring the value of labor, as we've done largely so far, has consequences. And one of the ones was mentioned by Hammad, the social unrest, human rights crisis that we're seeing. Part of that is due to lack of development opportunity, lack of equal opportunity, lack of a sense of purpose that many human beings have because it's not providing -- provided to them within their work environment. The loss of confidence in capitalism and the market economy, again, which was referenced by Hammad, is a result of us ignoring the value of labor. And the threat of a dehumanized society as many of the traditional service jobs are being devalued as well. So what can we do specifically? Well, first of all, when we think about a company's contribution to society, we very often think about their external impact, not about their internal impact in terms of how they are organized and dealing with their own employees. What are the sort of mini-societies that these companies create within their own 4 walls? Are these likely to bring out the best or the worst in people? Are the stated values of these companies an expression of the ego of the CEOs, something that they've come up with at their latest off-site? Or are they a set of values and behavioral principles that really are going to create highly functional mini society? So a huge amount of scrutiny on what are the -- what lies behind the values -- stated values [indiscernible] and are these being lived, I think, is required, including on behalf of investors in these companies. The second one then for me is we cannot hide just behind corporate governance frameworks as useful and as necessary as they are, principles around diversity, gender pay gap, modern slavery, essential, but we cannot hide behind them. I think we also need to get closer to the people who actually make our capital valuable. Go see, go spend some time with these people. What prevents you as an investor to go and work just for one day at the front line of the businesses that you're investing in and develop a completely different perspective on how value is created. Scrutinize the value systems of the companies you invest in. And rely not just on corporate governance framework, but also on your own beliefs and on your own humanity. And then thirdly and finally, as a society, we should expect more from business and the mini societies that they create. Their externalities in terms of how they treat their employees and whether they bring out the best in people. How do we create high-value jobs rather than low-value jobs as seen from the perspective of an employee?

Thank you, Jens. And so an interesting perspectives emerging between sort of, one, Hammad's view and Jens. And over to you, give the view from the sell-side industry as investors.

Yes, thank you. So Kamran, thank you very much for inviting me today. I'm really pleased to share the panel with Hammad and Jens. I'll bring yet a slightly different perspective than the 2 previous panelists. I work for the European Bank for Reconstruction and Development, the EBRD. We are a multilateral development financial institution that is owned by several countries, including European countries, the U.S., Japan, et cetera. We were set up in the early '90s to help the transition to market economy of the countries of Central and Eastern Europe. Our mandate was further expanded later on to include also Turkey, Greece and North Africa. Our mandate from the very first day, from the early '90s, was to balance the sets of criteria, which were and still are the financial viability of the operations we finance, the impact that the operations we finance have on countries, people and their ecosystem. And the third leg of this as well as that as a multilateral institution, we must not displace private capital and enter into competition with private capital. The ESG, environmental, social governance mandate was an intricate part of absolutely everything we do also from day 1, and we are very lucky to have an independent team, which supports us in bringing these aspects and everything we do. So the -- our concept of value within that framework is that all of these aspects have to come together. There isn't such a thing as a transaction that brings value to a country, if it's financial viable -- financially viable, but we can establish that the impact on that country and in the people isn't going to do well. The reverse is also true. So something that on the face of it would look very quite impactful and interesting for a country. But we can see that it's not going to be financially viable. This is also not a transaction that brings value. The long-term financial viability of our operation is just as important as the impact. It all goes together. And our concept of sustainable finance is that all of these things are -- come together as a unit and are all as important as each other. I want to come back on the ESG concept for a minute. I think a lot has been said generally about the E and the environment. And I want to spend a little bit of time on the G of governance and following up on to what Jens said. And I want to say a few things to that. The first one is that private equity is in itself, when it's in its purest form, a very sound model of governance in that it ensures alignment of interest. As Kamran mentioned, I'm on the Board of ILPA in West Europe and both associations have done a lot of work to try to find definition and to find tools on how we can measure these good models of governance. I would say that as part of any of the EGS and the G governance is one of the risks that a private equity firm is going to look at when doing a transaction, it's seen as a risk mitigator really. Jens was saying earlier, we cannot hide behind our governance framework. I would agree with this, but this is -- the governance framework is there to be applied. So at the level of a country, you would have regulations where by the freedom of one person ends where the freedom of the next one starts. Within the company, you have governance principles, which have a bit of the same role. But the strong governance is necessary framework to also embed the values and the culture of the company, I would say. Now I'd like to spend a little time on the S and the social. So I think the COVID crisis has brought to the front of the scene, the S of social. And then again, I want to say, private equity has actually behaved, so far, well. So we have seen, for example, private equity owned companies that have topped up the salaries of furloughed employees so as to try to help the people who are impacted by this crisis. Private equity is going to have a role to play also in the follow-up of this crisis. In the U.S., if we look at the U.S., 5% to 6% of employment are created or related to private equity. So there's a very strong role that private equity has to take in that. Private Equity club owned companies and others have seen CEOs that are taking it to the stance on issues of diversity on the issues also of the social unrest that's going on at the moment. This is something that's completely new. Whether the content of these statements is strong or not, just the fact that the financial world, the economic world is willing to engage in these topics. I think it's something that's very important and that we can welcome. So I think that, that general balance between market, state and civil society is definitely evolving. Stiglitz was coining this the progressive capitalism. So I don't know if Stiglitz' theory will come to life or not. But I think what I want to say and conclude on my introductory remark is that private equity has a role, and it has, if applied properly and to its extreme, the governance structure to help and to support the debate that we are going to have in this future society of ours.

Thank you. And so we'll move to questions. So look, each of the 3 panelists have shared this light from different prisms almost quite literally so. Hammad spoke about almost external engagement, right? And what is it that we can do for better civic engagement and sort of has shared with us from my seat, at least, they appear to be pretty extreme ideas. And Jens spoke about more internal engagement. And some of the things that Jens spoke about resonate, at least with me. And -- but I do want to explore 1 or 2 points that you made and Anne Marie spoke about some of these things coming together with the appropriate governance and here as the framework. So my first question for Hammad and that is, I'm having trouble internalizing this concept around, somehow, businesses that become large, user utilities ought to have some kind of public ownership. And I want to just take an example. So suppose one of office -- one of the Pizza Hut restaurant managers in Jens' outfit became a great entrepreneur and suppose he started a pizza chain that became the largest global pizza chain and everyone ate that. Are you telling me that somehow that should become a public owned enterprise?

No, no, not at all. And I don't want to sort of fall into the sort of pack need sort of market hating version that you guys can have a pick at. I think that would be far too simplistic. I think what I'm sort of talking about is there are businesses which are natural monopolies. And they don't emerge as natural monopolies. And in fact, they haven't been managed as natural monopolies, and we can find examples within sort of -- within the U.S. and the U.K. Well, let's take airports, for example. If you walk into -- well, not that many of us are walking into airports. But if you walk into one in London, you would be forgiven for imagining that you're in a shopping plaza, and you may sort of stumble onto a way to find your way to the plane that you have to take. Now if you -- and if you're flying to New York, and you can sort of forgive the very basic decor, you generally will be able to walk from plane out to the road in a few minutes' time. Single-digit minutes. And that reflects actually an idea of what an airport is in New York, it's being managed as a utility to give function to the people who use it. In the U.K., it's a shopping plaza with wings. And I think those ideas are -- they are not sort of preformed. They are shaped by exactly that triangle between state, corporate interest and civil society. And those things shift. And in the digital space, those shifts have yet to occur. Those conversations have yet to take place. We're still in its infancy. So the idea where a lot of the digital companies are operating right now, which is that, no, we're not a utility; no, we're not a media company; no, you can't regulate us; no, we won't pay taxes. Frankly, I think it's time to call them out. And if politicians are not doing it, it's not being regulated. I think it is time for -- and I think this is what we're beginning to see with efforts like the collectivize.org or an earlier initiative by the artist curator, Laurel Ptak on wages for Facebook, arguing that all of us are now sort of data operators for Facebook, and we should be paid for putting in our data. I think these are interventions. But the Pizza Hut, I would say, I mean, even if that becomes the biggest and best pizza chain in town, there will always be -- or there might be Pizza Express or like my local, Mamma Dough. So I think there will always be competition. It's not quite the airport for New York.

Understood. So Hammad, I mean, I appreciate the point that you're not coming sort of extreme left and a business hater. I take the point, you've after all been a businessman and all kind of need to earn a living, too. My question for you, a follow-on question. So in terms of how do we -- civic engagement is a good thing. Civic engagement for any organization to -- civic engagement is happening on this webinar, right? We have got people who are not as bankers or PE people. We've got others, as I mentioned. So how do we practically introduce the kind of civic engagement that you're talking about? And can you share very briefly, 1 or 2 examples or inspiring examples of where corporate civic engagements have worked well?

Well, I'll be very brief because I don't want to sort of hog the airwaves. But one project will -- I can mention is by the artist, Michael Rakowitz, that name may be familiar because he was the last occupant of the Fourth Plinth in Trafalgar Square. Now earlier on, he did a project in the streets of New York, of Boston, in Slovenia, in Baltimore, where he developed sort of shelters for homeless people. And these shelters were cobbled together with plastic tape, were trying to sort of conform with the legal definition. So under sort of Giuliani's, New York, that meant that nothing over 3.5 foot could be built. So all these shelters were under 3.5 feet. So there are not encroachments. And they would be attached to the ventilators of buildings like all the restaurants. So the only way they would take shape is when they're attached to these vents. And then they would provide not only shelter but also heat for homeless people. Now what that was, it's not a profit-making enterprise. And he published sort of the DIY ways of doing this in -- sort of in magazines that would be given out to homeless people. But it's actually a call for action for both sort of design firms, but also for policy as to -- it's not a solution for homelessness, but it's actually a call for action. And to me, I think that's what artistic practice is capable of doing is engaging others to answer this call.

Understood. We'll come back to you with some more questions. Moving on to you, Jens. I have 2 questions, one very briefly, please. First, did I hear you say, as you know, something around the people who work are driven more by pay engagement, a sense of family, a sense of caring and respect and not necessarily by money. Are you sure about that? So suppose you increased the salary of your Pizza Hut manager by 5x. That is not going to change his life entirely, and he'd rather take that than you smiling and being [indiscernible]

I think clearly, it's not one or the other. I think salary, just maybe a bit of an overused word, but it's a bit of a hygiene factor when it comes to levels of motivation. Of course, people want to be fairly compensated and appreciate sort of being able to share in the upside. But the mindset is not value maximization. And all people do not approach their professional life as how can I set myself up to make the most amount of money I possibly can. Most people are looking for a work environment that where they have chances of development, where they feel they can trust the people they work with, and where they feel they are respected by the company and the higher sort of levels in that company that they're working for. And I think that is incredibly powerful motivator. And we employ people who have been restaurant managers for 20, 25 years. Team members who've had better offers elsewhere, but who feel very loyal to the company and particularly to the values that we've defined jointly as the ones that we want to be living by.

Yes, how do values translate into EBITDA margins? So I guess my question to rephrase it. We think some tenants of values need to be there regardless of implications on your stock price and margins. Or you feel that you do need to tie them up to company performance, so that people actually embrace them. Because if you just talk about some kind of a nirvana world, some people will embrace and some won't. You'll talk about direct bottom line impact, it becomes a different dialogue, right?

Yes. I think you're understandably sort of succumbing to the temptation of wanting to define the value of value also as the value of capital or as an extension of the value of capital. And I do think that as you said yourself, that providing valuable jobs that bring out the best in people is a source of value in its own right and doesn't necessarily have to be measured through EBITDA. Now does it have an impact on EBITDA? Yes, I think it does, however difficult it may be to measure. But if you have a company where people actually like working with each other, a company that brings out what is good in people, a company where people have a sense of purpose and feeling that they're doing good to their colleagues and hopefully, also the society at large, then I think that over time, that is going to be a more successful company. Now whether that's 1%, 2%, 3% of EBITDA, frankly speaking, I can't tell you, but it makes playing the common sense that getting people to work constructively together is just a good thing for everyone.

Thank you, Jens. And I'd encourage the audience to start sending in questions. Time flies when you're having fun. And then I literally move to queue. There are 11 questions here right now. So Anne I just wanted to ask you, you talked about ESG. So for those of you who are not familiar, ESG is a concept in the business called, environment, social and governance. It speaks to importance of businesses to be focused on these 3 tenets of operating behaviors to contribute positively to this. So my question for you, Anne, is looking at the tealeaves, this catch-all phrase of ESG, do you think this will change or shift to include diversity, inclusion and other business engagement in society, and does -- is it already included in EBRD's definition? And do you expect this tough around gender and social engagement to become a more important selection criteria for managers?

So I would say, so EBRD already has an elaborate policy on diversity and inclusion, both for our own staff, by the way, as well as for the operations that we finance. It's just -- it's one of the aspects that we look at in everything we do. Again, what I want to insist on is that we look at these things and I saw there is a question asking whether EBRD will take gender representation as one of the criteria when we choose which fund manager we work with. So thank you also for that question, which I think is related to yours Kamran. So yes, we do. This is something that we would always look at. Again, we look at this as a -- the same way as we would look at -- it's part of the risk analysis. A company that has a healthy approach to gender balance, and that also has a healthy approach to looking after the environment and all of these things is just part of a group of criteria that we look at. And again, we are very lucky at EBRD to be supported by very professional teams in these different areas who can help us to support these things. What I would like to say as well, though, is that we wouldn't invest in a fund because there are 3 diverse managing partners in it. If it didn't also comply with all the other aspects that there is a strong alignment of interest, that there is a good track record, there are complementary skills in the management team. So we always look at this as a set of criteria that have to come together in our double bottom, triple bottom line approach. So it's a fine balance, but only gender balance isn't enough, only financial success isn't enough. All of it has to come together, bearing in mind that we work in emerging markets. So in emerging markets, the markets where we work, sadly, there isn't -- we can't have everything in one proposal that doesn't exist. But I would say it is important to have a balance between all of these things. And I want to also, coming to what Jens was saying. I completely agree on the point that whether well-being translated in EBITDA, well, maybe yes, maybe not, probably yes. I think there has started to be studies now that shows that gender balance and diversity in all respects, not just gender diversity, but diversity of all sorts, does eventually translate into EBITDA but that's not the only reason why to do it. Yes, of course, because it translates into EBITDA points, but also because it's part of good corporate governance and good corporate culture. Yes.

Behavior, yes. Anne, I think, coming from you as an experienced investor that all these things that we are talking about, they have a direct impact on financial performance, I guess, is important for the audience note. But we'll move to audience questions now. And I have -- my first question is 2 similar questions for Jens. And they are how do you think public spaces, particularly restaurants, will change in the post- COVID world and more particularly, will Pizza Hut buffets ever be back?

Sorry, could I just intervene in that first question for a tiny second?

Yes.

And I think it's an important point that restaurants are not public spaces. Restaurants are places where people can gather and they can be together. But they're not public spaces. I think at best, restaurants or lobbies of hotels are private spaces that give the appearance of being public.

Okay.

Yes. Thanks so much. Thank you very much.

Thank you for reminding us, Hammad. Sorry, Jens.

Yes. I just need to remind her mother, I'm still having to pay the rent. So the public is prepared to pay the rent but I'll make it a public space.

Touche.

Thank you all for the buffet question. It's great to have an audience that drills right down to the essentials here. And yes, buffet, we will be back probably not immediately as it's -- it will not comply with social distancing rules, but we will bring it back. And placed in a broader question of what's going to happen in the restaurant industry post-COVID. Well, I think the restaurant industry is one that is probably the most affected by this crisis. I think we'll have to adapt a lot of things, be it our service concepts, the amount of tables we can have in any sort of given space, sanitization and cleaning procedures, et cetera, et cetera. And that's clearly what everyone's working on very hard. I do believe that ultimately, the sector will bounce back because people have an inherent need to socialize. We are social animals. We are not social distancing animals. And the basic transient human need of actually having a meal together with your friends and family will continue to exist. And will continue to be served by the hospitality industry, which doesn't only cater to that very basic human need, but also creates, in my view, jobs that have true value because they are service jobs, because they are -- in order to have a successful restaurant business, your customers are never going to be happier than your employees. So you've got an intrinsic motivation to create a workspace and a work environment that people feel valued in.

Thank you, Jens. And Hammad, a question for you, talking about shared spaces at museums, parks and restaurants, how do we retain or reexamine value of these spaces? What's you're thinking? Very briefly, please. So there are now 15, 20 questions and 10 minutes to go.

Okay. Well, in a nutshell, I think we have to think about, again, that distribution of value. If you value something as a public space, then where is the public putting up -- paying for it, in a nut shell? So what we can't do is have public spaces then being trained to become like private spaces. So whereas, say, places like Tate Modern, for instance, where the public only provides 30% of the purse. And 70% is driven through revenue generation. Now if we force our public spaces to behave like private spaces, we're going to get much less out of them. And in the extreme, we threaten their existence as we are seeing with the theaters and sort of all forms of live performance right now.

Thank you, Hammad. Anne, for you, you talked about environment, social and governance. EBITDA margins and revenue projections are easy to predict and analyze. How do you quantify ESG? How do you measure that?

That's a very, very interesting question. So I think this is -- it's a debate that had already started pre-COVID crisis. And I don't think this is something where we have a conclusion and a final set of criteria for this. There's a number of different players who have come up with proposals in that respect. It can be developing financial institutions like ours, ourselves, the IFC and other cousin organizations. There has been some think tank also coming up with some definition. There are also many banks and private companies who are coming up with their own definition of what that means. So I think at the moment, it's a debate that is still ongoing. There isn't one set of criteria. I would imagine that we will end up eventually, not immediately. It will take several years, but we may end up with best practice the same way we have IFRS accounting standards, we may end up with environmental, [indiscernible] standards and social standards and these kind of things. This isn't -- it isn't -- it's an ongoing discussion. And a very important one because, of course, that also goes to one of the questions from one of the persons online is, how do you measure that you're doing a good thing? And how do we -- how can we say that? And is there evidence? There is evidence to the contrary. So for example, easy example is for Environmental Standards, a company that doesn't look after if there is a pollution hazard, for example, that it ignores when it's constructing a warehouse if at some point, there is a disaster related to that hazard that comes to place, it will directly hit it bottom line. So I think the reverse is also true. If you don't take care of these things, they have an impact the other way around. The perfect quantifiability is not there yet, but I'm sure we're moving in that direction.

Sorry, if I could just add one thing to that, which is that -- and I think it's a point that Jens made earlier, which is that we can't hide behind structures, whether they're of governance or are of measurements. Because what we're really talking about is of culture, and we need to shift culture. And that could be corporate culture or civic culture or social culture in terms of what is value. We've seen a little bit of that with COVID. And with people valuing different types of jobs, what's a key worker has become different.

Thanks, Hammad. Now...

Can I just add to -- sorry, Kamran. Yes. It sort of comes to my big plea to almost anyone on the call really is the biggest thing you can do is just spend one day doing the jobs at the people of the front line of your organization. Just do it one day. And I promise you that your concept of value, as related to labor, will fundamentally shift and the higher up you are, the more dignified your position is in society, the bigger impact -- the bigger the impact of that will be.

Thank you, Jens. I have a comment that I want to make and then a question related to that comment that appears to have come up. And that is, one of the things that -- I was speaking to a cousin of mine over the weekend, and we were talking socially distant on the phone, by the way. And just how little we actually -- we have realized in this crisis just how little we actually need. It's remarkable, right? And that is because the signals are not there. There's no one to signal a super designer buy or signal a designer handbag that she was talking about. And therefore, life has become in a sense, oddly, more real, and we have just become more comfortable with ourselves and who we truly are. And I think that has been one of the observations of the crisis. This is no way to minimize the phenomenal human costs of all this, what's happening around us. The question related to that is, how do we recalibrate our sense of value to accommodate a slower pace and rates of production and consumption? Economic recovery is prematurely or economics on our economy is producing the same rate as before, the logic of the furlough scheme regaining jobs, for example. Does anyone on the panel want to take a stab at this?

Well, I'm happy to start and then I'll sort of hand off. I think this is one of the real issues in terms of the approach and the game plans. Because while governments are talking about a game plan, we actually haven't seen one. And what this is -- everybody keeps on with the happy phrase of you can't waste a crisis. If we -- all that we do is just sort of hit reset, go back to where we were, we would have successfully wasted the biggest crisis that we've certainly faced in our lifetimes. So the green new deal or any aspect or variant thereof has to be part of what we sort of stumble towards post-COVID.

From my perspective, some of the outlooks are essentially predicting that if the economy doesn't quite quickly return to where it was in terms of level of activity, hundreds of millions of people, particularly in third world countries, will be tipped into abject poverty. I read a statistic of about up to 20 million excess deaths of children in third-world countries as a result of the current huge economic crisis that is potentially building up. So whilst I empathize with everything that's being said, a, look, to think that this is an opportunity for a complete revolution in the way we create value around the world and that it will be immediately post-COVID, I think there would be an enormous cost to that quantified in human lives. And I think it is essential that we do whatever we can to ensure that the economy recovers to the extent possible. However, I think there is -- we've discussed a number of hugely important topics today that has to be addressed with the same level of urgency. But I would guard against thinking that we can make significant short-term compromises in terms of the economic recovery in order to accommodate these very important concerns. And we'll have to go hand-in-hand.

Thank you. Jens. Anne, any thoughts from you?

I think it's a very -- it's, of course, a very interesting question that people have to answer at an individual level and then at the level of your family, your community, whoever you work with, the country where you work. And that recalibration is going to be something we will reflect upon as individuals and which will ultimately translate in ballot boxes. There will be -- all of our different countries will take a judgment and take a view on whether we feel that the countries where we live and the governments of the country where we live, have taken the right answer or not taken the right answer to these aspects, and it will -- the political scene of the years to come is probably going to be very interesting, and the debates are going to be very interesting. And in all countries, whether it's in our sort of the countries where we are, and as Jens just said, all imagine -- it's a catastrophe for emerging markets for sure.

Thanks. Anne one question that's sort of been percolating in my mind. As you know, Hammad, you referred to something called these pockets of utopia, instances of utopia, it's a pretty romantic sort of a fun, right? You have these flashes of utopia in your lives. And I guess as business people, I raise a question for all 3 of you. Why is it that the job of business is to create mini utopias, right? I mean why won't we just have people work hard and then let them create their own utopias in their own homes on their own personal time. I mean if I'm paying someone, why am I creating a utopia for that person? Other than if I'm socially driven that way and I've got emotional participation then, yes. But as a matter of corporate dictator policy, some might argue it's not the business of corporates to play at utopias. Does anyone wish to take a stab at that?

I don't see why, as a business leader, you need to leave your humanity at the doorstep of your offices. Why can't we be 100% human being in work just as we are in our personal lives? Why do we feel that somehow we need to magically turn into this homo-economicus, exclusively motivated by greed, the moment we step into our offices. I think it's a -- leadership is a privilege. Business leadership is a privilege. You're in a position where you're having an impact on the lives of hundreds, thousands or millions of people as many CEOs and investors are, just feel what that means as part of your life. I mean how can you not want to do your upmost to ensure that, that impact is, by and large, a positive one? Not just economically, but humanly as well.

If I can comment next, I would say that's exactly why I work for development financial institutions because we have this triple bottom line and so my daily life is completely imbued by all of these things. It's not a place where we look only at the financial viability or only at the impact. I really want to insist on that. We're not just there to do beautiful things. It has to be sustainable in the long run and to be sustainable in the long run, it also has to make financial sense. All of it has to come together. But I think at the end of the day, people choose, make these choices daily with the community they live in, their friends, their -- who they choose as their partner, and they choose also who they work for and the values of the companies they decide to go and work for are already contained in these dynamics.

And I think you also find examples of many utopias. But in the corporate world, I don't think they're mutually exclusive. For something like, say, the John Lewis partnership, that idea that every employee is really a partner as opposed to just bearing a label that says partner, I think, is an interesting one. Or if you look at the retail company, Richer Sounds, where the sort of the founding Managing Director handed over control to a trust owned by the employees. I think those are actually inspirational examples that we would do well to think about as we measure them against, well, let's say, Amazon, measuring how long you take your toilet breaks and how many.

And I would say, so the shared ownership. At the end of the day, you go back to the concept of shared ownership and alignment of interest between the employee, the shareholder. Which goes back to the private equity, which is the private -- if you look at the private equity models in simplest term, that's exactly what is -- it is meant to ensure that alignment of interests.

That's sort of slightly cheesy quote, which says be the change you want to see in the world. And I think companies can be the change they want to see in society at large. You've got the opportunity of a community that you're leading, that has a certain performance imperative behind it, that needs to deliver something. And why can't you create a mini version of society that really works the way you'd like society at large to function? Hammad's mini utopia is a really good metaphor for that.

Thank you, Jens. So we are almost out of time. But there are still about 100 of you on this call, and there are many questions here. So I'll a little bit extend this by just a few minutes. To ask a question that's come to you, Anne, and that is around climate change. And the question comes in from Colombia, and she is concerned whether the present pallor and emergency around COVID-19, does this put a pause on climate change initiatives? Or do you think this will put them more at the forefront? And what is your take as EBRD on this subject?

So EBRD's take, on everything that's climate, is that its total priority on what we're doing. Last year, more than 1/3 of all the transactions, EBRD financed -- we -- EBRD deployed roughly EUR 10 billion last year, not only in investment in funds, obviously, investment in funds is just one side of the business. So -- and 1/3 of these EUR 10 billion -- over 1/3 of these EUR 10 billion were to transactions that were having a positive impact on the topic of climate change. And our policy has changed as of this year, that percentage is going to increase even further. So it's completely critical to everything we do. I think the answer on whether the COVID crisis and climate are going to go hand-in-hand or whether the -- resolving the COVID crisis is going to go to the opposite of the climate change improvement, will depend on what are the avenues of all the questions we've asked so far. So if the answer of our government is to go back and go full-steam economic development, let's all reopen everything, economic development is the priority, then maybe not. But a more, I would hope personally that a more sustainable future for all of us as a society in all of our countries would be that on the contrary, it accelerates. The use of renewable energy, the use of looking at climate as something that needs to be addressed in an urgent manner. I'm sure many of you must have seen this little cartoon, which was showing there were several little waves. And there was the first wave, which was quite small with the 2008 financial crisis. Then there was a slightly bigger wave coming next with COVID-19. And then there's an even bigger wave arriving just behind, which was a climate change crisis. So hopefully, future generations will -- our generation, a lot of us working at the moment and in future, will see these things as having to be resolved now in the same manner of urgency.

Thank you, Anne. Jens, a quick question for you and the question coming in from Lahore, and he asks you work Incognito as a waiter in some of your restaurants. What have you really learned from this that was not available in your management presentations? So if I'm going to request you to answer this, in sharing with us what you have not already shared with us, right? So people like to be valued. Just give to us 1 or 2 interesting anecdotes that you learned. One staff anecdote, short one and one customer anecdote.

Well, first of all, it's petrifying. When you sort of step out of your CEO office and you put on a T-shirt and you let loose on the floor of a restaurants not really knowing what you're doing, and guests don't care to know who you are. They just want to get their pizza and they want to served. It takes you seriously out of your comfort zone, seriously out of your comfort zone, particularly if you do it authentically rather than at some sort of staged event. One of the things I learned is just humility. So you're working there serving pizzas. And all of a sudden, you're dependent on a spotty 16-year-old to tell you how to do your job. And you have just messed up an order, your guests are getting increasingly irate. And that 16-year-old is your only help, right? And it just shows you how interdependent we are as human beings. And I think many of us have learned this through the COVID crisis where all of a sudden, the guy who's delivering our food is the one person we're dependent on in life. When you end up in a hospital, the nurse who looks after you, all of a sudden becomes the most important for you in your life. And yet we devalue these jobs. We devalue these positions despite the fact that they're an essential part of how our companies can function, how our society functions, et cetera, et cetera. So that was maybe one insight that I had coming out of that. The other one is how bloody hard you have to work to generate GBP 1,000 of sales. I'd be on the skin of my teeth after a 6- or 7-hour shift. And literally just physically exhausted. And you think, how much revenue have I generated, GBP 1,000 and GBP 2,000. And then you think in other parts of the economy, be it in the investment community or the way we think about the business of CEOs, we think in millions or hundreds of millions or billions, without necessarily always acknowledging the huge amount of work, pain, suffering, commitment, skill that sort of sits behind the huge amounts of money that we talk about conceptually. So that was another sort of very big insight for me. My third story was, at the end of a shift, I had a bunch of teenagers who put up their hands and said, "Hey, mate, come here." And I thought what the hell is going to hit me now. And basically, they had found a few pounds together of cash, and they said, oh, that's for you, that's your tip. And that touched me somehow. I clearly gave it away to the guys back of the house, but it touched me that very often people who have the least amount of cash in their pockets tend to be the most generous.

And I have a comment coming in from Islamabad, the capital city of Pakistan, where I come from, and the writer says, keeping in view, the 2 major issues confronting the world today, would you agree that adding real value by any organization, no matter which business it is in, but not only we're boosting revenues, but meaningful contribution was maintaining the balance of the global ecosystem and equality of all human beings, I believe that will ensure success of all businesses. Utopia or real? Or is that in between?

Well, I think we're going back to one of my all-time great gurus, Bruce Springsteen, who said that nobody wins unless everybody wins. And I think we're kind of being reminded of that in our current times. And for those people who are sort of willing the pre-COVID yesterday to just sort of be resuscitated. Again, I sort of go back to say, the future is not an extrapolation of the past. That is simply not available to us. And even if it was, it would not be affordable, as Anne has just pointed out, as to its climate impact. And therefore, we have to reimagine it. And I think that's why it's an urgent need.

Yes. I completely agree with that comment from Islamabad, and thank you for putting it so eloquently. I think it's beautifully put and very true.

And I've got one more comment. Someone says to you, Hammad, Yes Bruce Springsteen is really what we all need right now and always. So look, still about 85, 90 of you here, but I ought to start closing up, but I want to give -- given the sheer number of people on this call, by the way, the moderators remind me just the questions that have come in today have come in from Colombia, Dubai, Lahore, London, Islamabad and Vancouver. So I want to just give the panelists a couple of minutes for their closing statements. So I wanted to leave with this audience, what is it that you want them to go back and all of us to go back and mull over. Let's start with you, Jens, and then Hammad and then Anne.

Yes. Thank you, Kamran, and thanks for all the excellent questions and comments, very stimulating debate. There's -- we're facing some very big discontinuities in society. And we talked about that, some real crisis, humanitarian crisis, climate change crisis. A lot of people in society who feel devalued, feel that they lack a sense of purpose. And I think that we, as businesses, can really make an immense change. I don't think we can think our way out of this. This is not just some really interesting, fascinating, intellectual exercise where we can endlessly sit in Zoom calls and meetings and say all the right things and think our way through this. I think -- and I'm coming back to my previous message, just get your hands dirty, go to the front line, see what it's like, see what the people -- see what sort of lives the people you employ are living and figure out how you can make these lives better. How you can, as a company, create this mini utopia that Hammad was talking about. And lead not just with your head, lead not just by being very competent, very intelligent and very thoughtful, but also lead with your heart. There is a place for humanity in business, and it is required now more than it has ever been before.

[indiscernible] Here. Hammad?

Well, I mean, if we sort of go back to then the idea and the role of Art, and I've been taking part in a number of sort of similar conversations within the cultural sector, where, as you can well imagine, there is outright fear as to what will happen to the cultural spaces. What will happen to the jobs and the way people are able to sort of make a living and make a life anymore. And I sort of left feeling that we have to remind ourselves and wider society, that art is one of those amazing things, which has, like the human being -- which has the capacity to be multiple things at once. It is a super luxury commodity that you can buy from Frieze Art Fair, but it's also a social good. As we saw in the Michael Rakowitz' shelters for the homeless. It's also a political urgency or a civic proposition and that idea of experimentation. And I think for all of us -- and there are artists lurking within all of us. I think it's time to embrace that idea of experimentation. I think thinking cannot be left only to the brain. We have to think with all of ourselves, be like the octopus.

Thank you, Hammad. Anne?

I would like to conclude with a couple of thoughts. The first one is that there is a role for private equity in this definition. It is a very and defining important moment for private equity. And I think we have seen the response so far, being very responsible. It has to continue to be in that way. All the business -- today's business actors will be defined by their reaction at this time of this crisis. And then my second thing is just -- it's maybe a platitude, but I think it's a very important thing to remember. I think both Jens and Hammad mentioned that, that future is going to be whatever we define of it. And we've all stressed that we need to also recognize our feelings and our emotions and govern not just from our heads, but also with all these other qualities. And I would like to hope that there has been all this debate about diversity, whether you need quotas, yes or no. And I would think that these are attributes which are generally more easily, not always -- and there are comments and examples in all the other way. But women, very often, have these attributes, and I hope that this is a time for showing how we can contribute to this future. And it's also for the younger generation to come up with ideas.

Well said. Well said. Thank you. Thank you, Anne, and thank you, ladies and gentlemen, dialing in. Some of you have dialed in yearly to our webinars. We hope you're finding these to be interesting models of engagement and sparks of utopia. I think that is -- the call of today is how do we create pockets of utopia. As I've committed to you, I owe you one webinar on globalization, probably the scheduling has been difficult. We will come back to you very quickly on it. We've also got one in the pipeline of the Middle East. And then I've got a rather exciting one-on-one conversation with one of the big thinkers and leaders in this industry. Yes, Bruce, you've just written in. You will be on the mailing list to be rest assured. I also wish to point out that there are 15, 20 questions here. You're also fabulous. Thank you very much. And we have not been able to get to all of your questions and comments for which I apologize. So maybe we can look at other formats for longer webinars. There are still 75, 80 of you on this link. So we'll be back to you. And as I've always mentioned, these don't get -- these webinars don't get together at the press of a button. Our marketing teams, my partners and colleagues are all involved. And as always, with great gratitude, my partners and teams and to my very, very esteemed panelists on this panel as well as on our previous panels, who have really come out from your considerably busy schedules and shared with us with open opinions. I want to close by something that I jotted down on LinkedIn recently. And I wish to clarify, these are my opinions alone. And that is that in order to ensure a better tomorrow for our communities, our companies and our planet, we need to think about our shared values. And this discussion really has been about those shared values, ladies and gentlemen. And we need to boldly embrace decisions even if they are inconvenient decisions, do the right thing. And we need to speak up and discuss inconvenient issues, given it is at personal risk. Ladies and gentlemen, it's necessary to ensure family large-scale change. I hope on behalf of all of us here, we will inherit a better world tomorrow, one that is more balanced, one that has more engagement from different stakeholders, one that engages our internal stakeholders, our partners and colleagues, healthy, transparent, trustworthy relationships to propel us forward as a race. And this I say, especially for those younger generations on this call. Thank you very much, indeed. Stay healthy, have a good weekend, and we'll see you again soon. Goodbye.