Buyout shops are arranging emergency funds, support networks and other steps to keep their companies alive during the pandemic
Private equity firms are taking steps to help their portfolio companies survive the coronavirus onslaught of forced closures, scattered workforces and upended markets.
From providing millions of dollars in emergency aid to more mundane things like phone calls designed to boost managers’ morale, professionals in buyout shops around the US are trying to ensure the new coronavirus doesn’t bring down their investments.
Platinum Equity is “working assertively to keep them all in business,” a person familiar with the matter said, referring to the firm’s portfolio companies.
At buyout shop Apollo Global Management, professionals are holding conference calls every other day with portfolio company managers and have created an information-sharing portal online that can serve as a resource to them all, said a person familiar with the situation.
KKR & Co. went so far as to hire an infectious disease expert to advise the firm’s companies on issues related to the coronavirus pandemic, said a person familiar with what is being done there. The firm also has connected its medical portfolio companies and other businesses to help supply guidance on dealing with situations that arise. Some KKR companies also have donated supplies such as surgical masks to other portfolio companies in need.
In one of the biggest efforts so far, executives at Los Angeles-based Leonard Green & Partners agreed to contribute $10m of their own money to provide emergency cash to employees of the firm’s portfolio companies that are affected by the virus.
“We want to support them and share the pain,” said managing partner John Danhakl.
Danhakl said the firm would disperse the money through emergency relief funds and other initiatives set up by the portfolio companies to assist employees.
“They should view us as a force multiplier for the things that they are doing on behalf of impacted employees,” he said.
One Leonard Green company, Union Square Hospitality Group, laid off 80% of its staff after the New York restaurant chain had to shut down most operations in accordance with government orders. The company’s chief executive, Danny Meyer, set up a relief fund to assist those who have been affected and said he would divert his salary into the fund.
In one of the earliest public actions to help battle the coronavirus outbreak in China, Blackstone Group in January pledged $1m to help local authorities in Wuhan, where the pandemic began. The firm also is halting evictions from apartments it owns in New York City, along with other members of the Real Estate Board of New York that control about 150,000 residential units.
Carlyle Group in Washington, DC, has also stepped up to assist communities in China, providing 3 million yuan ($422,024) in cash and medical supplies to front-line medical and support staff there, according to a person familiar with the matter.
The firm is also bringing together the resources of portfolio companies that can be used to support operations of those that have been affected by the virus.
In one example cited by the person, Carlyle’s HireVue, a provider of video interviewing systems, is giving three months of free access to its technology to other portfolio companies so they can interview job candidates and hire through the crisis, if necessary. The move was particularly welcomed by those trying to recruit for tech and business services jobs and can’t conduct on-campus and in-person spring interviews.
Source: The Wall Street Journal
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