In general, U.S. public pension funds more than sovereign wealth funds need private equity to help reach their annual target returns. This give-take relationship manifests across America, even when partner alignment issues arise. What has taken center stage is when private equity firms take monitor fees and transaction fees on failing portfolio companies.
The debt binge left a nasty hangover for many pre-2007 private equity funds. Side effects include poor fund performance, languishing portfolio companies and unemployed workers. Emboldened asset owners – some of the larger U.S. pensions are under fire from their support base, public sector unions, in what seems to be private equity firms making money from fees other than turning around actual portfolio companies.
Oregon Public Employees’ Retirement Fund – History with TPG Capital
|Vintage Year||Fund Name||Capital Commitment (Millions USD)||Total Value Multiple|
|1994||TPG Partners I||50||3.66x|
|1997||TPG Partners II||300||1.77x|
|2000||TPG Partners III||300||2.47x|
|2003||TPG Partners IV||300||1.9x|
|2006||TPG Partners V||300||0.97x|
|2008||TPG Partners VI||750||1.22x|
|2008||Apollo Investment Fund VII||400||1.76x|
Date: March 31, 2013, Oregon Public Employees’ Retirement Fund
Take for example, Caesars Entertainment Corporation, which TPG Capital LP and Apollo Global Management LLC took private with investor money, mostly public funds. The casino operator became saddled with debt affecting the financial health of the balance sheet. Coupled with top-line revenue shortfalls due to losses in gambling revenues, their investment faltered.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
Private equity firm BC Partners hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to advise on the sales of Acuris. Acuris is a collection of financial news and data sites, which includes Mergermarket, Dealreporter, and Debtwire. In 2017, BC Partners sold around a 30% stake in GIC Private Limited.
Before the rebranding to Acuris, Mergermarket was part of The Financial Times Group until 2013 when it was sold off to BC Partners.
Aflac Inc. is an American insurance company founded in 1955. The company is the biggest provider of supplemental insurance in the United States. Aflac also has major operations in Japan.
In December 2018, Japan Post Holdings (JPHLF) signaled it was spending US$ 2.64 billion for a 7-8 % stake in Aflac. The goal is that, in four years time, Aflac will become an affiliate of Japan Post. Japan Post hopes to accomplish this by becoming the largest voting shareholder of the company. The world’s 13th largest company, with 400,000 employees, Japan Post needs to expand to chase further growth, mainly because Japan Post expects the postal business to decline. Diversification is seen as the optimal route to long term stability for the holding company. Japan’s economy is worrying. Japan’s aging population means that many insurance companies are facing a shrinking customer base, Japan Post settled on a plan to expand overseas.
[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
The Russian Direct Investment Fund (RDIF) and the Development Agency of Serbia, also known as Razvojna agencija Srbije, reached an agreement to work together to identify attractive investment projects to strengthen bilateral economic ties and increase investment flows between Russia and Serbia. Russian capital and businesses are keen on investing in Serbia.
In addition, the two countries signed an agreement to cooperate on civil nuclear energy, according to state-owned Russian reactor builder Rosatom (Rosatom State Nuclear Energy Corporation). Rosatom continues to expand it business of nuclear cooperation deals in a wide number of countries.
3 weeks ago
Warburg Pincus Digs into Mainland Chinese Real Estate
4 weeks ago
East Timor President Vetoes Decree as Forces Wrangle over Natural Gas Fields
3 weeks ago
Michael Maduell – Bold Predictions for 2019
4 weeks ago
GIC-Backed Data Center Platform Competes in Virginia’s Data Center Alley
3 weeks ago
Saudi Real Estate Refinance Company Creates 11 Billion Riyal Sukuk Program
1 week ago
Caisse des Depots Raises Second Massive French Residential Property Fund
3 weeks ago
New World Development Company Buys FTLife from JD Group
2 weeks ago
Bridgewater Associates to Outsource Some Corporate Functions to Genpact