Irony is dead: Ethical Capital buys Pornhub
Private equity firm that prides itself on ‘ethics-based investing’ buys owner of porn website Pornhub
A private equity firm that prides itself on “ethical-based investing” has bought the owner of porn website Pornhub.
Ethical Capital Partners (ECP) bought Mindgeek, the Luxembourg-based owner of Pornhub and a number of other adult websites, for an undisclosed sum after the group fell into controversy.
MindGeek, one of the world’s largest porn companies, is being sued over allegations that sexually explicit videos featuring children were found on its websites.
The company’s top management left last year under a series of criticisms and was partially cut off from the Visa and Mastercard payment networks in 2020, almost leading to its collapse. However, the company denies any allegations.
ECP’s purchase of Pornhub will have surprised many – given that the private equity group says on its website it seeks investment in areas that require “principled ethical leadership.”
In focus: Ethical Capital Partners bought Mindgeek, the owner of Pornhub and a number of other adult websites, for an undisclosed sum
Despite saying it values ”transparency and accountability,” ECP declined to disclose which of MindGeek’s remaining executives would continue to lead the company.
Solomon Friedman, a lawyer and co-founder of ECP, told the Financial Times the company would not identify the executives because of the “unfortunate stigma” associated with the adult entertainment industry.
He added that, in his view, much of the criticism of MindGeek and the ensuing lawsuits was due to misunderstandings about how the company protected its content — a problem compounded by the secrecy of its previous owners, including the Austrian businessman Bernd Bergmair, a former Goldman Sachs employee.
ECP’s purchase of MindGeek is likely to fuel skepticism about investment funds that classify themselves as meeting environmental, social and governance (ESG) criteria. ESG is a set of standards used to measure a company’s impact on society and the environment, as well as how transparent and responsible it is.
But the framework has been criticized in recent years, as some companies have been caught marketing themselves as ESG compliant while investing in sectors that go against the ethos.
ESG compliance is particularly controversial in the area of climate change. A report last October from data platform ESG Book highlighted 95 climate funds that have invested in fossil fuel companies, including Shell and US giant ExxonMobil.
Analysis by online asset manager SCM Direct showed that the SPDR US High Yield Corporate ESG fund, managed by US investment firm State Street, had investments in gambling, tobacco and adult entertainment companies – despite claiming to exclude companies from based on their “involvement in certain controversial business activities.”
The £6.8bn Royal London UK Core Equity Tilt fund claimed to incorporate ‘responsible investing and environmental, social and governance insights’ into its strategy, while top positions included Shell, BP and British American Tobacco.