“Josh is a critical member of our private equity team. As co-lead of middle market buyout, he has taken on increasing levels of responsibility, leading investments in funds and co-investments, while also developing new structures that have expanded our opportunity set within the asset class. He is a creative and critical thinker who balances a granular understanding of investment topics with drive, and that makes him central to our program. Josh’s passion for people development also shines through in his mentorship and determination to expand opportunities for all members of our team. His hard work and dedication continually improve our private equity program, and he truly has had a meaningful impact on our organization.”
—Dan Bienvenue, deputy CIO, CalPERS Investment Office
When the markets went into freefall last March, Josh Bowman, CFA, helped lead Private Equity’s business continuity efforts at the California Public Employees’ Retirement System (CalPERS). Within weeks of the stay-at-home order, the entire Private Equity investment team was fully operational and working remotely. Even more impressive, in the first few weeks of the market decline leading up to April, Bowman and his team closed on $1.5 billion in commitments.
His responsiveness during the crisis and his quickness in closing deals have won him admiration from his peers. Over the past 12 months, as co-lead of the middle market buyout, Bowman and his team have underwritten more than $5 billion in commitments, including one of the largest co-investment transactions in recent history. “It was a very productive period of time,” he said.
Bowman was the first one in his immediate family to go to college. A desire to leave the Seattle rain brought him to California, where he spent time consulting for six years at Ernst and Young. Thereafter, Bowman spent nearly 10 years as vice president at Goldman Sachs before becoming an investment officer at CalPERS, where he now serves in his sixth year.
CIO: What is the best way to bring more diversity to the financial industry?
Bowman: The ‘best way’ is ‘many ways,’ coupled with continuous feedback about those efforts. Institutions and leaders will benefit from continuous experimentation and sharing lessons learned. We have to be reflective of our current and historical practices, and make conscious the unconscious bias we have lived with for so long. Over the long term, some of the ‘many ways’ that could have an impact are: a focus on education—both schooling, but also on-the-job continuing education; evolving interview techniques; and seeking talent from broader sources. Further, organizations have to look hard at how they support team members and be empathetic to different needs and life stages.
One thing that has stuck with me is from the book, ‘Are You Smart Enough to Work at Google?’ Some of the best software engineers were those who started coding or building computers at an early age, as tweens/teens. Might exposing people to investing and financial principles at younger ages yield future diversity in the industry?
CIO: What are your favorite alts, and why?
Bowman: Nimble middle-market companies looking to scale by taking advantage of new technologies. We are now seeing companies scale at a rate far faster than we have historically and with dramatically less capital required. We are in the early innings of technology’s impact on society and when new, scale businesses are built at a pace faster than what we have experienced in the past—there is an opportunity to participate in backing those companies and participating in the equity value creation.
CIO: Is cryptocurrency a flash in the pan, or an asset of lasting value?
Bowman: Tulips thrive in certain gardens today. Cryptocurrency has shown it is more than a flash in the pan, though the volatility makes it difficult to assess as a stable store of value. Its value, like other currencies, is premised on belief. I have heard thoughtful bull and bear cases. Time will tell.
CIO: What place does blockchain have in tomorrow’s financial scene?
Bowman: Blockchain technology has the potential to be an important component of the financial system by reducing transaction costs and mitigating cybersecurity risks. Though we are in the very early innings with many of the potential upside and downside risks yet to be seen.
CIO: How will ESG change investing going forward?
Bowman: Going forward, investing will be more complex, more nuanced, and more transparent because of ESG [environmental, social, and governances investing]. In my mind, the heart of ESG is a principled and wholistic view of asset ownership. Companies are complex structures with many stakeholders, not just shareholders. Data will ultimately be a key component to ESG. Asset owners will leverage that data to make informed decisions about assets, management teams, etc. that they want to own, exposures (preferred factors or not), and in what proportion. As we have already seen, asset owners will leverage this data and their respective views to engage and facilitate change at portfolio companies.
CIO: Where do you see the most exciting areas to specialize further over the coming years?
Bowman: Artificial intelligence [AI] and data expertise. Investing in today’s world is all about data, massive amounts of data. Asset owners who leverage these two trends will be the future alpha generators.
CIO: What should be an investment trend, but isn’t (yet)?
Bowman: Community-based investing to support local ownership of real estate and small businesses. For example, in a situation in which a family is renting a home, and the home they rent is listed for sale on the market. If the renters are unable to purchase the home on their own, the renters can seek local support to fund their equity gap. While the idea needs more refinement, I have seen too many families, who were contributors to our local community, leave due to being priced out of the market.
CIO: What investing decision have you made that you’re most proud of?
Bowman: Letting my experienced mid-level team members lead investments while I provide support and coaching. My team’s capacity has grown exponentially.
CIO: Who is the manager you don’t currently work with whose brain you’d most like to pick for an hour?
Bowman: There are so many, but I would like to meet Mary Meeker of BOND.
