Private equity guide.In 2007, the IUF published a A Workers' Guide to Private Equity, a 36 page A5 brochure, aimed at IUF affiliates and trade unions and their members around the world. Available in English, French, German, Spanish and Swedish, it remains an indispensable guide for trade unionists. Click here for more details and to order your copies.

March 04, 2016

Private equity the new shadow banks?

The IUF began documenting the evolution of leveraged buyout funds into multi-faceted financial conglomerates - and the risks this posed to workers and to financial regulation - even before the great financial meltdown, which accelerated the trend. A recent article on the Naked Capitalism website (The New Shadow Banks: Private Equity Becomes Private Credit) details the ways in which "private equity funds, whose business model depends on high levels of borrowing, have gone into the shadow banking business to supplant banks as their debt suppliers."

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November 06, 2015

Plunder, profit and private equity - a Trojan horse and the future of regulation

Ancient Greek myth tells the story of the Trojan War, according to which Greek soldiers defeated the city of Troy they had besieged for ten years by means of a giant wooden horse in which soldiers were concealed. The unwary Trojans, thinking it a gift, brought the horse into the city and out popped the soldiers, who pillaged the city, murdered the inhabitants and left Troy in ruins. A Luxembourg court will shortly decide whether the alleged looting of a Greek mobile phone company by two large private equity funds, Apax and TPG, was a financial Trojan horse carried out by fraudulent means.

That decision will presumably impact on a civil lawsuit by the same creditors which will be heard in a US court next year. But it should also serve as a warning to what the financial vultures circling a Greek economy bled dry by successive 'bailouts' may bring. And it should prompt a fresh look at the EU's Alternative Investment Fund Manager Directive (AIMF Directive), which ostensibly safeguards against 'asset stripping' by private equity investors, in view of another potential leveraged buyout bubble.

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August 03, 2015

Largest US public pension funds have 'no idea' of fees paid to private equity managers

The UK Financial times reported on July 12 that Calpers, the California public employee pension fund with over USD 300 billion in assets, has 'no idea' how much has been paid in fees and carried interest to its private equity managers over the past 25 years.

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September 12, 2014

Burger King's debt whopper is a public subsidy to fast food poverty

Thousands of fast food workers across the US again walked off the job and engaged in civil disobedience actions on September 4, pushing low-wage work and the need for an increase in the national minimum wage further up the political agenda. Shortly before, announcement of a proposed merger between US-based Burger King and Canada's Tim Hortons "fast-casual" sent both companies' shares into the stratosphere. What's the connection?

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March 14, 2014

Heinz, Mondelez and the private equity effect

Private equity dominated the February Consumer Analyst Group of New York (CAGNY) conference, even without a formal presence - a measure of the extent to which the buyout funds' operational methods have permeated the food industry. While leveraged buyouts have not yet recovered their pre-2008 scale or volume, the big buyout houses emerged from the meltdown bigger than ever as complex financial conglomerates for whom pillaging companies is only part of the business of buying and trading everything. But private equity is not a closed universe. The funds' substantial footprint in the processed food industry, as elsewhere, has brought into the mainstream the financial engineering and aggressive cost-cutting developed through decades of leveraged buyouts.

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October 22, 2013

Volatility alert for hospitality employees: Private equity pushes REITs aside as top hotel owner

The past decade, over which private equity buyouts went from mega-boom to bust, brought about a dramatic change in the ownership structure of the hospitality industry. Ten years ago, private equity firms accounted for 12% of hotel rooms among the 10 largest hotel owners, with Real Estate Investment Trusts (REITs) owning 67%. Private equity firms now own 59% of rooms among the top ten, with REITs at 33%, according to a recent study by Hotel News Now.

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March 01, 2013

The more things change: Heinz and the varieties of private equity buyout

Subject to shareholder approval later this year, Warren Buffet's Berkshire Hathaway and Brazilian 3G Capital will acquire food giant Heinz for USD 28 billion. It is a private equity buyout with a twist - appropriate for a company which marketed the phrase "57 varieties" - but the impact on Heinz workers will be similar to what workers have long experienced in leveraged buyouts: intense pressure on employment and working conditions as investors seek to wring out the last drop of cash.

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October 11, 2012

Banks, buyout firms agree to major settlement in lawsuit charging planned bankruptcy of major retailer - a 'game changer' for private equity?

Four years after initiating legal action, creditors of the bankrupt US retailer Mervyn's have won a major settlement from the private equity firms and banks which drove it out of business by piling on debt and stripping the company of cash. Bankruptcy resulted in the elimination of 18,000 jobs. Will it change the terms of the private equity debate which has resurfaced in the US with the nomination of former Bain boss Mitt Romney as the Republican presidential candidate?

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November 07, 2011

MF Global - canary in the (financial) coalmine?

The October 31 collapse into bankruptcy of MF Global, the US brokerage firm with investment bank appetites and ambition, was the eighth largest corporate bankruptcy in US history, behind Lehman Brothers, Enron and Washington Mutual but ahead of automaker Chrysler. As with any bankruptcy, clients are scrambling to recover their money, but large sums have gone missing.

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March 24, 2011

Kraft and Private Equity Slash and Burn at UK’s Burton’s Biscuits

Burton’s Biscuits, the UK’s second largest biscuit manufacturer (after private equity-owned United Biscuits), has announced it will close its factory in Moreton, Merseyside, with the loss of 342 jobs, despite commitments to the union at the site that production would continue through May 2012. Workers at the plant, represented by Unite the Union, are being squeezed by two converging financial forces: transnational food giant Kraft, for whom Burton’s manufactures Cadbury biscuits and chocolate products, and Burton’s private equity owners.

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