Pensions Get Bolder in Challenging Private Equity on Investments' Human Cost.
'Private equity firms and public pension funds have long had a symbiotic relationship: The funds supply the firms with billions of dollars to invest, and the firms deliver double-digit returns that help the funds support retired public servants.
Now, pension leaders are showing a new willingness to confront private equity over the human impact of its investments.
Minnesota’s pension plan temporarily halted investments in one of Toys “R” Us’s former private equity owners, Kohlberg Kravis Roberts, after hearing that 30,000 workers laid off amid the retailer’s bankruptcy had been denied severance.
A top Oregon pension official criticized the private equity firm TPG for what he said was its serious lack of diversity, specifically citing a disparaging remark that one of the firm’s founders had made about women.
And New Jersey’s pension fund moved recently to ensure that private equity firms with mortgage investments in Puerto Rico were not foreclosing on residents of the island after the havoc caused by Hurricane Maria.
Pension officials said the moves were sound investment decisions that were not driven by politics. Major layoffs at companies owned by private equity firms can hurt local economies, where pensions are broadly invested. A harassment scandal could damage a private equity firm’s reputation and, by extension, a pension fund’s investment.
Pensions have long shunned investments unpopular with the people they represent, often in broad categories like guns and fossil fuels. But in recent years, pension holders’ concerns have gotten more specific, and calls for the funds to take stands have increased.
“We are having more contact with the public about these types of issues,” said Adam Liebtag, the acting chairman of the New Jersey State Investment Council. “They are paying closer attention. They are following the money.”
New Jersey is a hotbed for social concerns over pension investments. In addition to voting to more closely monitor firms under the moratorium on foreclosures in Puerto Rico, the state recently pulled money out of a private equity firm that had acquired a so-called payday lender.'>>>
https://www.nytimes.com/2018/10/08/business/toys-r-us-workers-public-pensions-private-equity.html?
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GOOD news, imo.
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