THE SET-UP: Private Equity has been on a prolonged binge since the Crash of 2008, and it only seems to be accelerating … particularly in the healthcare space. So let’s look at perhaps the world’s most powerful “PE” firm—Blackstone. Not coincidentally, Blackstone’s Steven Schwartzman is a Trump supporter who was at the nexus of Trump’s enmeshment with Saudi Arabia. Obviously, Jared Kushner played matchmaker throughout Trump’s Saudi-friendly administration and, of course, the Saudis turned Jared the Slumlord into a PE powerhouse in his own right.
Go figure.
TITLE: Corporate underminers of democracy 2024
https://www.ituc-csi.org/corporate-underminers-of-democracy-en
SUBLINK: Blackstone Group
https://www.ituc-csi.org/blackstone-group-en
EXCERPTS: Corporate underminers of democracy is the International Trade Union Confederation’s list of emblematic companies that benefit financially by continuing to violate trade union and human rights, monopolise media and technology, exacerbate climate catastrophe, and privatise public services. They represent a wider corporate world that protects and expands its own profits by undermining democracy.
These companies deploy complex lobbying operations to undermine popular will and disrupt existing or nascent global policy that could hold them accountable. They are invariably led by ultra-wealthy individuals that support and finance far-right politicians and parties to further their own interests. When the far-right wins power, it discredits and defunds democratic global institutions; reduces taxes on the wealthy and on corporations; undercuts living wages; favours bilateral aid financing over multilateralism; and cracks down on human, trade union, and democratic rights, as evidenced by the ITUC’s Global Rights Index.
The list of corporate underminers of democracy for 2024 is:
3. ExxonMobil
4. Glencore
5. Meta
6. Tesla
Blackstone’s leadership finances right-wing, autocratic politicians who derail regulatory policies designed to keep rogue corporations in check.
There is a good chance that homes in your neighbourhood, offices in your city, warehouses based in your community, hotels in which you stay, or products that you purchase come from companies that are a part of Blackstone’s sprawling global portfolio. The world’s largest private equity firm and commercial real-estate owner, and the largest private landlord in India, Spain, and the United States, Blackstone is emblematic of the explosive growth of private equity in the 21st century.
That growth has come at the expense of billions of workers around the globe. Blackstone is well-known by climate justice advocates for its role in the rapid deforestation of the Amazon rainforest and huge investments in fossil fuel projects. In the UK, Blackstone reaped huge profits while saddling one of the country’s largest long-term care providers with insurmountable debt. Blackstone infamously profited from housing market speculation after the 2008 financial crisis and aggressively evicted workers after the Covid-19 pandemic.
Blackstone and its subsidiaries have been penalised for competition, contracting, employment, financial and consumer protection violations to the tune of nearly US$300 million in one country alone. It was also the face of child labour in meatpacking, is known for its exorbitant fees to manage worker pensions, and has so far failed to sign up to a coalition-designed Private Equity Labor Rights Platform. In Brazil, it has been criticised for helping to privatise public infrastructure and corporatise agricultural land.
Blackstone seems to believe that it – not voters – should determine public policy. The United Nations Special Rapporteur on housing has accused Blackstone of, “using its significant resources and political leverage to undermine domestic laws and policies that would in fact improve access to adequate housing.” Led by billionaire Stephen Schwarzman, a prominent backer of far-right political campaigns including Donald Trump’s 2024 re-election bid for the US presidency, Blackstone’s network has spent tens of millions of dollars supporting politicians and political forces who promise to prevent or eliminate regulations that might hold it to account. After far-right politician Jair Bolsonaro was elected president of Brazil, Blackstone ludicrously claimed that the country’s democracy was not at risk, providing cover for Bolsonaro to lay siege to civil society and trade unions. It then sponsored a gala by the Brazilian-American Chamber of Commerce to honour Bolsonaro as “Person of the Year.”
Schwarzman himself extracted US$1.2 billion in pay and dividends for himself in 2022 alone, a perfect example of the egregious inequality that threatens democracy everywhere.
TITLE: Kushner’s Fund Has Reaped Millions in Fees, but So Far Returned No Profits
https://www.nytimes.com/2024/09/25/us/politics/kushner-private-equity-saudi-arabia.html
EXCERPTS: The private equity firm run by Jared Kushner, the son-in-law of former President Donald J. Trump, has been paid at least $112 million in fees since 2021 by Saudi Arabia and other foreign investors, even though as of July it had not yet returned any profits to the governments largely bankrolling the firm.
Those are among the findings of a Senate Finance Committee inquiry into the operations of Affinity Partners, the Miami-based firm Mr. Kushner set up.
The committee opened an investigation this spring in response to reporting in The New York Times examining the firm’s first three years of work.
Senator Ron Wyden, Democrat of Oregon, the committee’s chairman, said the new information had only deepened his concerns that Mr. Kushner’s firm creates conflicts of interest, particularly with his father-in-law running for re-election.
Mr. Wyden asked why Affinity Partners had not “distributed a penny of earnings back to clients,” and suggested that perhaps it was set up primarily as a way for foreign entities to pay the Kushners rather than a typical fund in which partners reap the returns of deployed capital.
“Affinity’s investors may not be motivated by commercial considerations but rather the opportunity to funnel foreign government money to members of President Trump’s family, namely Jared Kushner and Ivanka Trump,” Mr. Wyden wrote in a letter to Affinity this week, asking two dozen questions.
As The Times has previously reported, at least 99 percent of the roughly $3 billion invested came from overseas sources, including $2 billion from the Saudi government’s Public Investment Fund.
Most of the rest of the money comes from the sovereign wealth funds of Qatar and the United Arab Emirates, as well as a chunk from Terry Gou, the Taiwanese billionaire and founder of Foxconn, the world’s largest electronics contract manufacturer.
But there is a fifth “mystery foreign investor Affinity has declined to identify,” according to the letter the committee sent this week to Chad Mizelle, Affinity Partners’s chief legal officer.
Data assembled by PitchBook, a private equity industry research firm, found that profit distributions are most common during a fund’s sixth and seventh years and Affinity has not reached this point. But PitchBook also found that most private equity firms started to pay at least some profits within 2.5 years.
Private equity firms like Affinity raise money from investors, then reinvest that capital into small, often not-yet-public companies they believe have a good chance to grow quickly or be run more efficiently. The hope is that those bets will generate enough return to eventually pay back the original investors with profits that far exceed the management fees.
As of the end of 2023 — halfway through the five-year investment commitment that Saudi Arabia and the other foreign governments made to Mr. Kushner — the firm had invested about $535 million of the $3 billion, with that total rising to about $1.1 billion as of July, according to the committee, citing information provided by Affinity.
Saudi Arabia pays Affinity an annual fee of 1.25 percent of its investment, while the three other known investors pay between 1.25 and 2 percent in fees, though Affinity Partners would not disclose exactly how much.
This led the committee staff to estimate that through the end of 2024, a total of $157 million in fees will have been paid to Affinity Partners, with $87 million of that from Saudi Arabia. If the total amount is calculated just for three years based on 1.25 percent fee minimum for all investors, that would mean at least $112.5 million in total fees through July and at least $75 million from Saudi Arabia.
The original investment by Saudi Arabia was made only after officials at the Saudi investment fund questioned Mr. Kushner’s experience as a venture capitalist. Before joining the Trump administration, he had been a real-estate developer and had not previously been involved in large international financial deals.
But the board of the Public Investment Fund, led by Crown Prince Mohammed bin Salman, whom Mr. Kushner had developed a friendship with while serving at the White House, overruled these objections and approved the deal, The Times reported in 2022.
TITLE: New Report: Private Equity continues to lead Private Markets amid growing interest from private wealth
https://www.webwire.com/ViewPressRel.asp?aId=327371
EXCERPT: A new report from Barclays Private Bank has revealed that private equity continues to lead private markets amid growing interest from private wealth investors.
The inaugural report, Forging New Paths: How private investors are capitalising on the evolution of private markets, sheds light on the resilience and growth potential of private equity (PE), and venture capital (VC), identifying the key trends that private investors could consider when building a diversified portfolio.
It shows that despite broader economic challenges, PE funds have captured a record 50.5 per cent of private capital fundraising in the year-to-date. Global closed-end private capital funds had assets under management of $14.7 trillion as of 2022, a figure projected to reach $19.6 trillion by 2028. These funds have collectively raised nearly $2 trillion in additional fresh capital since the beginning of 2023.
The report also speaks to private wealth investors’ growing interest in private markets as they increasingly recognise the opportunities presented through these fund channels, following in the footsteps of their institutional counterparts.
The report reveals:
Both PE and VC exhibit strong historical returns, but the significance of manager selection cannot be understated. PE vintages from 2011 to 2022 outperformed the S&P 500, while VC funds, which have displayed greater volatility, have exhibited stronger returns with an 11.8 per cent 15-year internal rate of return (IRR).
Limited partners (LPs) have a preference for experienced Private Equity managers: In each year since 2019, more than 80 per cent of all new PE dollars raised were closed by experienced managers, and this percentage rose to 88 per cent YTD.
Family offices are increasing and diversifying their private market allocations, reflecting a desire to capture higher returns and align investments with personal values or global trends. Whilst high net worth individuals (HNWIs) are driving greater resilience and diversification into their portfolios by looking beyond the 60/40 portfolio into the private markets, looking to complement and diversify existing public market exposures.
There has been a significant shift in the dynamics of angel investing, with HNWIs increasingly favouring more established and traditional channels. HNWIs have pulled back somewhat from direct angel investments over the past decade as the wider private markets industry has evolved to allow private wealth investors to invest in more mature and established companies via funds or direct channels.
Venture capital is increasingly dominant in private wealth portfolios, with nearly half of all private capital fund commitments in the past decade being allocated to VC by count. However, the number of VC funds actively raising capital has declined, presenting both challenges and opportunities for investors seeking to maintain their exposure to this dynamic asset class.
Shenal Kakad, Head of Private Markets, Barclays Private Bank, commented: "Our report underscores the evolving sophistication of private wealth investors, who are increasingly adopting institutional strategies in their pursuit of higher returns and portfolio resilience. We are also seeing growing demand from clients looking to make private market allocations based on their desire to not only capture higher returns but also to align with their personal values or global trends.
“For high net worth individuals and family offices the opportunities within private markets are significant.”
SEE ALSO:
Private Equity Calls in Experts to Fix Companies They Can’t Sell
https://www.bloomberg.com/news/articles/2024-09-25/private-equity-calls-in-experts-to-fix-companies-they-can-t-sell
Why Private Equity Is Rushing To Buy Up Accounting Firms
https://www.forbes.com/sites/kellyphillipserb/2024/09/23/why-private-equity-is-rushing-to-buy-up-accounting-firms/
Private equity firm acquiring diagnostic imaging provider for $658M
https://radiologybusiness.com/topics/healthcare-management/mergers-and-acquisitions/private-equity-firm-acquiring-diagnostic-imaging-provider-658m
Private equity firms bid on Sanofi's $16B+ consumer health business: Bloomberg
https://www.fiercepharma.com/pharma/private-equity-firms-circle-sanofis-16b-consumer-health-business-potential-deal-nears
Retirement village company Arvida to be sold to US private equity firm
https://www.rnz.co.nz/news/business/529025/retirement-village-company-arvida-to-be-sold-to-us-private-equity-firm
BC Partners in exclusive talks to invest in EuroLeague basketball competition
https://www.ft.com/content/ee46dd4d-ec64-452f-a219-918c9219a8dd
Private Equity in College Athletics?
https://swimswam.com/private-equity-in-college-athletics/
Barnes hits out at private equity and garden centres
https://www.hortweek.com/barnes-hits-private-equity-garden-centres/article/1890009