Most stock investors wouldn't turn to the research department of a labour union for advice, but that hasn't prevented UNITE HERE Local 2850 from waxing analytical on business development companies.
In July, UNITE HERE, which represents US and Canadian hotel, laundry and textile workers launched an unusual website offering insight into KKR BDC, the proposed mezzanine lending platform sponsored by Kohlberg Kravis Roberts. You can find it at www.kkrbdcexposed.com.
“Welcome to KKR BDC Exposed, a one-stop information clearinghouse for investors considering buying a piece of KKR BDC Inc.,” reads the site, which bears an uncanny resemblance to the official KKR website.
What follows is a collection of article clippings and SEC document excerpts that do not paint a flattering picture of this particular security. Under the heading “Take Action!” the site asks: “Do you share our concerns with KKR BDC Inc. (excessive fees, potential conflicts-of-interest, anti-investor corporate governance, etc.)?”
Andy Lee, head of research for UNITE HERE, says his organisation's “concern” stems from the fact that members of Local 2850 are currently in the midst of unpleasant contract negotiations with a KKR-affiliated hotel company, KSL Recreation. On August 13, for example, nine labour activists were arrested at San Diego's Hotel del Coronado, owned, indirectly, by KKR. Protesters had taken over the hotel's lobby and were shouting at guests not to check in.
On the Web, UNITE HERE hopes that by shouting at investors about KKR BDC, it can exert some added pressure during the sensitive pre-IPO period. “Our basic philosophy is that companies should be responsible to investors, consumers, workers and communities,” says Lee.
But it appears that market forces beyond the control of labour activists have already conspired against KKR's business development company. Last month the firm reportedly abandoned its plans to raise $600 million through an IPO.
Whether the aims of UNITE HERE succeeded or not, its research project highlights a potential trend: private equity firms with exposure to unionised companies might find themselves increasingly involved in labour disputes. Two recent court cases in the US ruled that private equity firms are, in fact, “employers” of the union members at their portfolio companies.
FERRER FREEMAN CLOSES $400M HEALTHCARE FUND
The Greenwich, Connecticut firm's third fund will make private equity investments of between $15 million and $45 million in later-stage healthcare companies to fund organic growth and acquisitions. Ferrer Freeman will invest in the healthcare services, clinical products and the outsourcing and infrastructure sectors. The firm's prior investment vehicles were FFC Partners I, capped at $210 million, and FFC Partners II, closed at $291 million in 2000. The firm was founded in 1996 by Carlos Ferrer and David Freeman.
$1.8BN FOR GOLDEN GATE'S SECOND VEHICLE
Golden Gate Capital, started in 2000 by former Bain professionals David Dominik and Jesse Rogers, will continue its strategy of investing in “change intensive” growth businesses in various sectors, including software, electronics, manufacturing, media and medical devices. The newest fund is more than double its $700 million (€570 million) predecessor, and brings the firm's total capital under management to approximately $2.5 billion. A majority of LPs from the debut fund signed on for the second vehicle.
TEXAS PACIFIC LINKED TO HEDGE FUND
According to reports, the private equity giant will back Dinakar Singh, a star trader from Goldman Sachs, in establishing a new hedge fund, to be called TPG-Axon Capital. The new group will seek to raise up to $3 billion (€2.4 billion) in the coming months. Singh, 35, was reportedly one of Goldman's most highly paid employees as head of the bank's $10 billion Principal Strategies department, a proprietary investment unit. He left the post last month. In partnership with Texas Pacific, led by David Bonderman, Singh reportedly would gain access to the firm's network of executives and stable of portfolio companies, providing him with a possible competitive edge in the hedge fund industry.
MARSH CLOSES $1.1BN INSURANCE MEGAFUND
MMC Capital, the private equity arm of professional services giant Marsh & McLennan, has rounded up a new megafund for investments in the global insurance, employee benefits and financial services industries. Trident III will make equity investments of between $25 million and $150 million. MMC Capital has raised more than $3 billion since 1994. The Trident Partnership raised $667 million in 1994 and Trident II raised $1.4 billion in 1999. Prior to the formation of the Trident Funds, MMC Capital helped create six insurance companies and recapitalise an existing insurance company.
PANTHEON'S $900M SECONDARY VEHICLE OVERSUBSCRIBED
The global fund of funds specialist announced a final close for its oversubscribed second secondary fund in less than nine months. Roughly 60 limited partners from around the world committed to the fund, Pantheon Global Secondary Fund II. The new fund will be led by Jay Pierrepont, a partner in Pantheon's San Francisco office. Secondary activity will be led by Elly Livingstone from London. Earlier this year, Pantheon was acquired by Russell Investment Group; this new secondary fund is the firm's first new vehicle under new ownership.
CALTIUS ANNOUNCES $300M MEZZ FUND CLOSE
The Los Angeles-based firm closed its third mezzanine fund with about 80 percent of capital commitments coming from new LPs. Fundraising for Caltius Partners III began in September, with an initial fund target of $250 million. More than 90 percent of the capital came from US investors with the rest coming from European LPs. Investors in the new fund include Adams Street Partners, HarbourVest Partners and US Bancorp, as well as insurance companies, private and public pension funds and a number of high-net worth individuals. The fund will invest between $5 million and $30 million in companies in service-oriented non-capital intensive industries including healthcare, consumer products and business services.
HELLMAN CLOSES ON $3.5BN, OPENS LONDON OFFICE
San Francisco-based buyout house Hellman & Friedman announced the final close of its fifth fund in conjunction with the opening of a London office led by managing director Patrick Healy. The majority of capital committed to the new fund came from return backers, including the New York State Teachers' Retirement System, CalPERS and OMERS. The new fund, like its predecessors, will make equity investments of between $100 million and $750 million, primarily in the US and the developed markets in Europe and Australia. Meanwhile, the opening of the new London office is, according to the firm, meant to “help the firm monitor and build its existing European investments and continue to seek investment opportunities in the United Kingdom and continental Europe”.
PLATINUM CLOSES RECORD $700M DEBUT FUND
The Los Angeles-headquartered firm has closed the largest first-time buyout fund raised in the US in the last two years. The global acquisition firm already has 19 operating companies generating global revenue of $5.5 billion. Two pending acquisitions will boost total revenue to $8 billion. The company focuses on the acquisition of service-providing businesses. The names of the limited partners have not been disclosed. The firm was founded in 1995 by Tom Gores, brother of Gores Technology Management's founder Alec Gores, and was ranked 34 on Forbes magazine's Largest Private Companies List in the US in 2003.