General Motors’ private equity programme is continuing with “business as usual” despite the company’s bankruptcy filing Monday. It will continue to fulfill its LP obligations, the head of its private equity programme told PEO.
GM values its combined private equity and hedge fund assets in its most recent annual report at about $5.4 billion, according to the company's annual report.
The company’s pension fund has been among the major backers of alternative investment funds, including Accel Partners, Advent International, Apollo, Clayton Dubilier & Rice and Coller Capital.
The vehicle-manufacturing giant’s private equity portfolio is managed by Greenwich, Connecticut-based Performance Equity Management, which spun out of GM Asset Management in 2005. GM has a 49 percent stake in Performance Equity. Performance Equity manages about $12 billion across venture, co-investment and global private equity funds of funds, with GM and other institutions as clients.
GM will be restructured by splitting in two – creating an “old GM” and a “new GM”. The company will transfer assets it wants to keep into the new company, and asset it wants to sell into the old company.
The company’s pension, along with its in-house asset management unit Promark Global Advisors, will be transferred into the new GM as a going concern, according to Charles Froland, chief executive officer of Performance Equity. Promark manages $132 billion in funds, which include GM’s own pension funds as well as some external pension funds.
“Restructuring is complicated and there may be changes in the details of which funds are where,” Froland said. “What is known is the Promark entity is not part of the filing, but that it will be part of the new company as that emerges from the bankruptcy process, and so our relationship with Promark is unchanged.”
GM will meet all its capital call obligations as a limited partner in private equity funds, Froland said. Also, the company doesn’t anticipate having to sell any fund interests on the secondaries market, he said.
“The investment programme is pretty stable, we’ve already gone through all of the considerations, and the pension plan in regards to alternatives doesn’t have the issues you’ve heard about some of the state pensions having,” Froland said. “There’s no liquidity issue, no denominator problem.”
“They are continuing on with the same programmes they have, making good on all LP interests,” Froland said.
The integrity of GM’s pension programmes is important to the future success of the company, and there is “great interest” on the part of all stakeholders in the company to make sure “all investment programmes work as they normally would to ensure the integrity of pension assets”, Froland said.