Rightly or wrongly, private equity companies in Oregon and across the nation have a reputation for secrecy.
They tend to swoop into a company with investments from murky sources, make a few changes (aimed at boosting short-term profits) find a buyer and ride away again, with the firm’s customers, clients and employees never knowing much about the private equity firm’s investors or influences.
Trillions of dollars’ worth of assets across the globe are controlled by largely secretive private equity companies, says Mark Gardiner, who ran the Oregon Investment Council for eight years. Because those companies aren’t publicly traded, and because those firms mostly come and go, “that’s probably why they are not transparent,” Gardiner says.
The investors in such firms prefer to remain confidential, says Babson of Endeavour Capital. Endeavour lists all of its investments on its website —New Seasons Market, Bi-Mart — but neither his nor any private equity firms disclose the amount of their investments, and most individual investors ask to remain anonymous.
“These firms don’t want their limited partners to know how much money they’re taking from them, which is a lot,” says Gardiner. “They’ll argue they’re secretive to protect the investments in their companies, but it’s really about protecting the general partners from transparency to the limited partners. Private equity firms are finding more and more ways to take money out of these companies in fees, and that’s started to get some exposure and pushback.”
Some private equity firms are increasingly opening up. The Fort Worth-based firm TPG recently launched a billion-dollar fund aimed at corporate transparency, says Equilibrium Capital Group’s Chen. The New York firm KKR has placed more and more emphasis on transparency and sustainability throughout its investments and projects.
“Those are two of the most hallowed names in private equity,” Chen says. “Their investors are asking for it, and they also think it’s a market opportunity, creating value from transparency.”