The IUF's Private Equity Buyout Watch

Sovereign Wealth Funds (SWF) – state-owned, state-run investment entities– have begun to generate controversy and debate as they have recently emerged as significant global financial players. SWFs have recently taken large stakes in public stock exchanges, major manufacturing, service and infrastructure transnationals, and thrown a lifeline to private equity funds searching for "permanent money". This introductory briefing was prepared for the IUF Executive Committee, which met in Geneva April 17-18, 2008.

Continue reading "Sovereign Wealth Funds and Private Equity " »

Posted on May 6, 2008 05:35 AM | Permalink

Despite the global credit crisis, private equity firms have raised record amounts of cash so far this year - and that cash will be seeking outlets.

Continue reading "Global Credit Crisis? Record 2008 Fund Raising for PE Firms" »

Posted on May 5, 2008 05:43 PM | Permalink

Desperate to move off the books over USD 43 billion in leveraged loans - loans it couldn't securitize and unload when the global credit crisis hit - Citigroup has found the ideal buyer: the private equity firms whose buyouts generated the loans.

Continue reading "Locusts into Vultures 2: Funds in $12.5 Billion Debt Buyback Deal " »

Posted on April 11, 2008 03:32 PM | Permalink

Against a backdrop of financial meltdown and the specter of global recession, this year's World Economic Forum in Davos, Switzerland published a paper on the impact of private equity (PE) buyouts, part of which was devoted to their employment impact. While participants could get their minds off skyrocketing food prices and global hunger riots at the panel on "Food, Culture and Civilization" (which included celebrity chefs), or meditate on the implications of "Happiness - How Much Can You Take?", the WEF press department was charged with the thornier task of packaging the conclusions of the private equity study. Apparently they were hoping that few people were really paying attention.

Continue reading "Illusion, Reality and Spin: Davos, LBOs and Job Destruction" »

Posted on February 4, 2008 02:58 PM | Permalink

CalPERS, the California Public Employees' Retirement System, has taken its third direct ownership stake in a private equity firm by spending an estimated USD 275 million to acquire 10% of Silver Lake Group, a US-based fund specializing in technology buyouts.

Continue reading "Growing Pension Fund Stakes Feed PE Search for 'Permanent Money'" »

Posted on January 31, 2008 02:10 PM | Permalink

The gaming industry (casinos), a major employer in the IUF sectors generally thought of as relatively immune to cyclical developments, is showing signs of being hit by the credit crunch afflicting LBOs. Beginning with the 1998 Colony Capital buyout of Harvey's Casino Resorts, buyout funds have moved into the sector in a big way, attracted by the industry's tempting real estate portfolios and stable cash flows.

Continue reading "Casino Business Wobbles at High Stakes Debt Table " »

Posted on December 4, 2007 04:04 PM | Permalink

Always in the forefront of financial innovation, the buyout houses are rushing to speculate in the massive debt their activities have generated. Private equity firms are lining up for the heavily-discounted debt – some USD 350 billion of it - the banks are anxious to unload following the collapse of the high-yield debt market

Continue reading "Locusts into Vultures: Buyout Firms Turn to Speculating in…LBO Debt" »

Posted on October 1, 2007 04:48 PM | Permalink

The most detailed study to date of management fees shows the funds raked in close to 20% in fees of the funds under management - with carried interest accounting for only around a quarter of the total.

Continue reading "New Wharton Study Shows the Measure of the Buyout Fee Racket" »

Posted on September 17, 2007 11:28 AM | Permalink

Workers are finding that even a failed private equity buyout bid has an impact on employment security, trade union rights and working conditions.

Continue reading "Learning from the Locusts: When corporate management starts acting like private equity" »

Posted on September 7, 2007 10:25 AM | Permalink

US retailer Home Depot (persistently rumored to be a potential private equity target) has announced plans to borrow some USD 12 billion to finance a USD 22.5 billion share buyback, one of the largest buybacks ever. The move, which brings with it a lowering of the company's credit rating, highlights the growing penchant for corporations to take on debt in the service of shareholders, rather than investment.

Continue reading "Debt Contagion" »

Posted on July 4, 2007 04:47 PM | Permalink

Few would doubt that closing tax loopholes which allow private equity firms to deprive public revenues of billions is an important and necessary step. There’s also no doubt that this is the most popular (and populist) measure that can be taken. But it’s far from adequate if governments are serious about reigning in the buyout funds. The main problem of leveraged buyouts by private equity funds is just that... leverage.

Continue reading "Taxes are only half the story, the other is DEBT: Proposals to tax private equity firms are just the beginning, not the end of the debate" »

Posted on June 27, 2007 11:43 AM | Permalink

Private Equity International the monthly publication reporting on private equity, has ranked the 50 largest buyout funds on the basis of funds raised over the past 5 years. The top 50 have raised USD 551 billion over this period, accounting for 75% of global buyout activity. Using a conservative multiple of 5, the funds exercised a total buyout power of USD 2.76 trillion.

Continue reading "Top 50 Buyout Funds Ranked" »

Posted on May 3, 2007 10:14 AM | Permalink

On April 19 at the European Parliament in Brussels, the IUF presented evidence on the destructive impact of private equity buyouts on the European food sector, highlighting the buyouts' destructive impact on employment, the environment and employment conditions generally. The seminar was organized by the IUF together with the Party of European Socialists, the structure grouping Europe's labour and social-democratic parties.

Click here to read the IUF presentation.

Posted on April 25, 2007 07:49 AM | Permalink

"Proponents of buyouts argue that they free companies from the tyranny of short-term earnings expectations, the burdensome requirements of the Sarbanes-Oxley corporate reform law and pressures exerted by big investors such as hedge funds. That may be fine for management, but it ignores the fact that large privately held companies tend to be less responsive to concerns about their impact on labor and the well-being of communities in which they operate."

Continue reading: Philip Mattera, ‘Private Inequity: How mammoth Buyouts are changing business for the worse’, Corporate Research E-Letter No. 64, March-April 2007.

Also read: "The private equity challenge for corporate researchers", Dirt Diggers Digest No.76, 13 April 2007, edited by Philip Mattera.

Continue reading "PRIVATE INEQUITY: HOW MAMMOTH BUYOUTS ARE CHANGING BUSINESS FOR THE WORSE" »

Posted on April 14, 2007 08:55 AM | Permalink

According to an article in The Financial Times (21 March 2007), 'Bertelsmann teams up with private equity':
"Bertelsmann, Europe’s largest media company, is joining forces with private equity groups, to establish a novel €1bn investment partnership which could herald a newly acquisitive growth phase for the owner of RTL and Random House. The family-controlled German group will contribute up to €500m to the new fund over three to four years, with the remaining equity provided equally by Citigroup Private Equity and Morgan Stanley Principal Investments."

Continue reading "Teaming up with the Locusts: A New Private Equity Model?" »

Posted on March 25, 2007 08:57 AM | Permalink

From: Scotland on Sunday Sun 4 Mar 2007
PRIVATE EQUITY PAY RISE SHAME
By DOUGLAS FRIEDLI

PRIVATE equity-backed companies give smaller pay rises than other firms, according to a report which is likely to fuel the controversy over the growing industry.

Staff working for bought-out companies, usually backed by private equity, received average pay rises of between £84 and £231 a year less than their counterparts in quoted and family firms, according to the Centre for Management Buyout Research.

Continue reading "Report exposes "......[buyout firms] breaking implicit agreements with respect to pay that transfer wealth from employees to the new owners"" »

Posted on March 4, 2007 08:41 AM | Permalink

"Businesses bought by private equity funds that borrow money to pay their new owners a dividend have contributed to a decline in the credit quality of European companies, ratings agency Standard & Poor's said." Read more....

Posted on March 1, 2007 09:03 AM | Permalink

A crucial part of the challenge that food workers’ unions face is that the private-equity funds that own and control the workplaces that employ their members do not see themselves as employers. In many systems of jurisprudence they are not defined as employers and do not incur the legal obligations binding on employers.

Continue reading "Private-equity funds - Invisible Employers?" »

Posted on February 24, 2007 10:49 AM | Permalink

This article by IUF staff was published in the journal Labour Education, the quarterly review of the ILO Bureau for Workers' Activities 1/2006 (No. 142).

Click these links for the article in PDF format:English; Spanish; French; German.

Continue reading "FINANCIALIZATION: NEW ROUTES TO PROFIT, NEW CHALLENGES FOR TRADE UNIONS" »

Posted on February 24, 2007 10:34 AM | Permalink

In the past five years private-equity funds have become significant short-term owners of manufacturing and services companies - acquiring, restructuring and disposing of these companies as liquid assets regardless of actual productivity and profitability. Over the past decade private-equity funds have mobilized trillions of dollars for the acquisition of companies in virtually every industrial and service sector, leading The Economist to declare: "Today, the private-equity industry has moved from the fringe to the centre of the capitalist action.”

Continue reading "Private-equity buyouts of companies in IUF sectors - the changing organizing & bargaining environment " »

Posted on February 23, 2007 10:55 AM | Permalink

Private-equity buyouts in the global hotel industry are on the rise. In many cases private-equity funds are interested in hotel real estate as a financial asset, and are not interested in running a hotel business. This has led to significant changes in the priorities and goals of hotel management. These changes are based on financial targets that include extraordinarily high rates of return to shareholders (15-20%), financing new hotel properties through debt rather than re-investing profits and the rapid acquisition and liquidation of hotel properties as ‘real estate assets’.

Continue reading "Private-equity buyouts in the hotel industry" »

Posted on February 22, 2007 11:06 AM | Permalink

Colony Capital LLC is one of the largest REITs in the world with US$14 billion invested in properties globally. In 2005 Colony Capital bought the Singapore-based hotel chain Raffles Holdings Ltd. for US$1 billion including 41 hotels and resorts (15 Raffles Hotels and 26 Swiss Hotels & Resorts) in 35 countries.

Continue reading "Colony Capital buyouts in the hotel industry" »

Posted on February 22, 2007 06:21 AM | Permalink

In March 2006, financial market analysts speculated that Goldman Sachs is putting together a group of private-equity funds to make a £30 billion bid for Unilever in its entirety and taking the company private.

Continue reading "A Goldman Sachs buyout of Unilever?" »

Posted on February 21, 2007 02:18 PM | Permalink

Click here to watch the video interview on IUF Asia-Pacific's Asian Food Worker with Vice President Kunio Akiyama , who outlines the situation and describes the union's initial response (Japanese language, English subtitles, Windows Media Format, 8.1MB).

The following is an excerpt from the interview with Brother Tatsuya Matsumoto, Tokyu Tourist Trade Union, a member union of the IUF-affiliated Service Tourism Rengo, in the article of Hiroba Union 2006 January issue.

Continue reading "The buyout of Tokyu Tourist Corporation & its impact on unions " »

Posted on February 21, 2007 11:15 AM | Permalink

Until July 2006, the largest leveraged buyout in history was the takeover of RJR Nabisco by the private-equity fund Kohlberg Kravis Roberts & Co (KKR) for US$31.4 billion. In July 2006 this record was broken when KKR, together with Bain Capital and Merrill Lynch, bought out the biggest hospital group in the US, HCA, for US$33 billion.

Continue reading ""Barbarians at the Gate" - KKR's leveraged buyout of RJR Nabisco in 1988 " »

Posted on February 1, 2007 10:57 AM | Permalink