US labour union Unite Here is questioning LNK Partner’s co-investment practices and calling on its limited partners to seek more clarity around the process.
The claims come amid a dispute between Unite Here members and management at an LNK portfolio company.
In a report this month, Unite Here questioned the level of disclosure that LNK made to its limited partners regarding its co-investment funds, including its allocation process, fees and performance. It followed a report in May from the union that questioned the pace of growth at the portfolio company, Au Bon Pain, which LNK acquired in 2008.
The union is scrutinising LNK’s co-investment activities while its members employed by Au Bon Pain at Philadelphia airport are in a wage dispute, Jim Kane, a research co-ordinator with Unite Here, said.
“Private equity is an industry that generally hasn’t had a lot of attention compared to the public markets,” Kane said. “From a governance level the work we do can benefit limited partners and make sure that we’re raising material issues with solid research.”
Heather Stone, a partner and co-chairwoman of the investment adviser and alternative funds group at Locke Lord, said the union appeared to be “using any levers related to the company employing the workers, or any stakeholder in that company, in order to garner attention”.
One source with knowledge of LNK’s investment practices dismissed the notion that its LPs would not be aware of its co-investment practices given its longstanding ties to its LPs. The source believed that the union’s claims were a pressure tactic connected to the dispute in Philadelphia.
A spokesperson for LNK declined to comment.
Unite Here, which represents workers in food service, hospitality and other industries, also recently called into question the monitoring of fees connected to TPG Capital’s portfolio companies. “TPG Capital appears to continue to employ fee practices that have been flagged by regulators as problematic,” the union said.
New York-based LNK is currently raising its third vehicle, targeting up to $460 million, which will focus on buyouts of North American consumer goods and retail companies, according to PEI Research & Analytics.
In June, LNK, which typically seeks to invest up to $150 million in a transaction, completed its more than $4 billion take-private purchase of health club chain Life Time Fitness alongside Leonard Green & Partners and TPG.