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Fund to Invest in Companies That Promote Women Board Members

According to the New York Times, "A Swiss investment company plans to raise awareness about the shortage of women on corporate boards around the world, and generate returns for its investors in the process.

Naissance Capital, based in Zurich, is to start the Women’s Leadership Fund in January, which will invest exclusively in companies whose boards include women, or take minority stakes in companies that do not 'understand the need for greater female representation' and use it as leverage to push through changes.

R. James Breiding, a co-founder of Naissance Capital and a former director of Rothschild Corporate Finance, said the fund was created after several studies showed a correlation between the number of female directors and a company’s performance.

'We feel companies that select and recruit people on merit should do better,' Mr. Breiding said. 'Having greater diversity and independence of opinions helps.'

The fund’s board includes Kim Campbell, the former prime minister of Canada; Cherie Blair, a lawyer and the wife of Tony Blair, the former British prime minister; and Jenny Shipley, the former prime minister of New Zealand. Naissance has lined up $200 million from institutional investors and individuals to invest in 30 to 40 companies around the world, and plans to increase the size of the fund eventually to about $2 billion.

Naissance, which was founded in 1999 and specializes in what it calls 'niche investment opportunities,' is one of a handful of firms that have created funds over the past three years to invest in companies with female senior executives.

Stargate Capital in Britain is in the process of raising a second venture capital fund, worth about £10 million, or $16 million, to help women entrepreneurs, while Amazone Euro, a fund run in Geneva, has invested in companies with female board members.

Two separate studies in 2007 by McKinsey and Catalyst, the business research firms, showed that companies in Europe and the United States with the most women on their boards were more profitable than others. But the studies did not point to specific causes for any such correlation.

In 2003, Norway became the first country to adopt a law that said 40 percent of board members at large companies must be women, but there is not yet any research that analyzes how the changes have affected the companies’ performance.

The banking crisis and the collapse of Lehman Brothers have ignited a debate about whether more women in senior roles would help improve corporate governance. In Britain, the minister for women and equality, Harriet Harman, caused a stir over the summer when she partly blamed the lack of women in senior roles in the financial industry for the crisis, saying if it would have been 'Lehman Sisters' rather than Lehman Brothers, the company might have survived.

A review sponsored by the British government on an overhaul of corporate governance, to be published next month, could add to pressures on companies to promote equality of the sexes among their directors."

This looks a lot like the Diversity Fund we started in 2003.

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