The Closest Thing to White Supremacy I’ll Ever Get to Write About

It’s not Charlottesville, but the hypocrisy of TPG’s William McGlashan — the prominent impact investor caught up in the college acceptance cheating scheme — is as despicable as I’ve ever seen.

Illustration by II

Illustration by II

I’ve always wanted to write an article about a white supremacist managing an ESG fund. This story might be as close as I get (until Institutional Investor underwrites my use of facial recognition software so I can go through the video footage of Charlottesville to find marchers who work in our industry).

On March 12, 2019, 50 people — including William E. McGlashan Jr., TPG Capital senior partner and Rise Fund CEO — were accused by the Justice Department of taking part in a major college admissions scandal.

McGlashan was charged with participating “in both the college entrance exam cheating scheme and the college recruitment scheme,” which included paying $50,000 to have his son’s ACT answers corrected after the test was completed and creating a false athletic profile for his son.

Days later, TPG terminated McGlashan for cause. (Or, if you believe McGlashan, he resigned.)

Other individuals charged in this case work(ed) in the asset management industry (Robert Zangrillo of Dragon Capital Management, Manuel Henriquez of Hercules Capital, and John B. Wilson of Hyannis Port Capital).


Yet McGlashan deserves special recognition. He was not just another private equity barbarian at the gate, any more than Rise Fund was just another bloated private equity fund.

Rise Fund, in its own words, is “the first global, scale private equity platform directing institutional capital to businesses that measurably address pressing societal challenges.”

And McGlashan was not merely the very embodiment of its social mission; he was, according to the Financial Times, the “poster boy for the impact investing sector.”

Even before the original idea for Rise Fund came to him during a stay on Richard Branson’s private island, McGlashan focused on growth investments with social impacts.

To realize his vision, McGlashan recruited Bono, Jeff Skoll (the first employee of eBay, who now runs Participant Media and is a major philanthropist), and the “sparkly people on the founders’ board” — all of whom are investors in the fund. (The board includes Branson; Laurene Powell Jobs, a philanthropist investor; Reid Hoffman, a founder of LinkedIn; Mellody Hobson, president of Ariel Investments; Lynne Benioff, a philanthropist; Mo Ibrahim, perhaps the most influential investor in Africa; and Pierre Omidyar, the founder of eBay and a backer of First Look Media.)

Until last Tuesday, McGlashan was also Rise Fund’s chief evangelist, spreading his gospel of collinearity (i.e., “business models in which the financial returns are inherently dependent on driving the intended societal impact”) and convincing institutional investors to invest in Rise Funds I and II. (McGlashan was quite successful in his proselytizing; as he told Barron’s, “about 70 percent of the capital that we raised for Rise came from entities that had never done impact investing before.”)

A juxtaposition of McGlashan’s professional commitment and personal actions reveals an alarming incongruity.

Professionally, McGlashan deployed his clients’ funds to achieve “measurable, positive social and environmental outcomes alongside competitive financial returns.”

Personally, he appears to have used his private funds to achieve an unashamedly socially unjust outcome: disadvantaging “the hardworking students who did everything they could to set themselves up for success in the college admissions process, but ended up being shut out because far less qualified students and their families simply bought their way in,” according to FBI Special Agent Joseph Bonavolonta.

McGlashan could tell a reporter at Davos in January 2019, “What we [at Rise Fund] are trying to do and are focused on is holding ourselves accountable every day with every deal. . . .” And in February 2019 he could accept Private Equity International’s Game Changer of the Year award while apparently having known, perhaps as early as October 2018, that he himself was the subject of the FBI investigation, which had tapes of his conversations with the conspiracy’s ringleader.

To add insult to injury, McGlashan’s alleged payments to his fixer were funneled through a nonprofit whose explicit mission is to provide “education that would normally be unattainable to underprivileged students . . . our contribution to major athletic university programs, [sic] may help provide placement to students that may not have access under normal channels.” And by calling them charitable donations, McGlashan could write them off.

This barefaced hypocrisy is what sets McGlashan apart.

Perhaps there is more to the story that reveals some saving grace — but this is what can be parsed in the public domain. It is damning.

If we assume that investors care about a manager’s character and that investors selected Rise Fund because of both its expected financial return and its social impact, then McGlashan’s actions should cause current and future Rise Fund II investors to take advantage of TPG’s magnanimous offer to withdraw their commitments.

Limited partners in Rise Fund I should be given the same offer: They should have the option to pull their capital. After all, McGlashan represented both funds. You can tell me about the structural and legal issues related to such an offer, but it would show true alignment with the firm’s clients. At a minimum, TPG should explain why it would not extend this offer.

Private Equity International might want to consider rescinding its ironically named Game Changer of the Year award, too.

When Rise Fund launched in 2016, Bono said, “Capitalism is going up on trial, and I think that it’s clear that putting profit before people is a nonsustainable business model.”

I’d guess that Bono (who has been uncharacteristically reticent about this turn of events) probably regrets ever uttering this sentence. It is McGlashan who might be going on trial for putting personal gain before social good. The question for investors: Does this result in a nonsustainable business model for TPG and Rise Fund?