Private Equity Briefcase
July 18, 2008
It's On Now
The private equity public relations battle of the New Millennium is taking shape.
It pits the labor union Service Employees International Union, also a strident critic of Washington’s Carlyle Group, against Kohlberg Kravis Roberts, one of the pre-eminent investment groups in the buyout industry.
The SEIU launched its latest broadside on Thursday. In addition to issuing a news release against what it said was a backdrop of rising income inequality and economic anxiety, calling for an end to tax loopholes for wealthy buyout CEOs, the labor organization launched a 25-country global protest. Activists, estimated to number 150 by Reuters, sported purple tee shirts and holding signs bearing slogans like “End KKR Greed” and “Take Back the Economy,” shuffled the sidewalks outside of KKR’s New York headquarters on 57th Street in Midtown Manhattan.
(IDD pre-reported the planned demonstration in a blog entry on July 11.)
KKR, meanwhile, informed its workforce in New York of the demonstration via an email that essentially asked employees not to respond to the protestors, IDD has learned. Noise from the street level was said to have penetrated certain rooms within the hushed confines of KKR’s 42nd floor offices, says a person with knowledge of the situation.
The developing public protest, incidentally, involves more than just KKR and the SEIU. Both organizations are drawing the support of third party organizations.
Besides its two million member muscle to draw upon, the SEIU is backed by other labor unions as well as activist organizations. It also is waging a grass roots effort by asking anyone interested to pen letters to their local newspaper editors and speak out about tax loopholes. By contrast, KKR’s supporters include the Washington buyout industry advocacy organization the Private Equity Council.
The same day as SEIU members took to the streets, the PEC issued its own announcement that said among other statements: “It’s disappointing that at a time when everyone with a stake in a strong American economy should be seeking ways to find common ground, the SEIU is more interested in headline-grabbing street theater than solving the challenging economic issues facing the country today.”
It went on to say that private equity is a vital source of capital for investment in the US economy, which has strengthened many American businesses, including MGM Studios, Dunkin Brands, Continental Airlines, Toys R Us, Univision, J. Crew, Burger King, AxleTech and others.
KKR wasn’t unprepared for the union’s demonstration. It issued a statement ahead of the protest, taking the outspoken labor organization to task: “We disagree with the SEIU’s distortion of the facts and their street theater approach. We work hard to build better companies that benefit multiple stakeholders – including the millions of pension beneficiaries who receive good returns on our investments. The reality is that we are committed to creating jobs and strengthening companies, communities, corporate governance, and the environment, and our recent partnership with the Environmental Defense Fund is a good example of our efforts to work constructively to achieve important stakeholder goals.”
The SEIU noted on its website Friday that thousands of workers and community leaders took part in worldwide protests at KKR’s corporate offices. Along with New York, KKR has offices in Menlo Park, Calif., where 200 marchers reportedly gathered, as well as offices in Paris, Hong Kong, Tokyo and London, where the SEIU said 40 protestors marched from Trafalgar Square, according to the SEIU’s website.
KKR, to its credit, hasn’t only funded corporations around the world. It deserves kudos for supporting the environment. In information furnished by the private equity firm, it noted that it has formed a “Green Portfolio” initiative with the Environmental Defense Fund, an environmental organization that gave its blessing to the KKR and TPG-sponsored acquisition of Texas energy giant TXU, now known as Energy Future Holdings, last year. The initiative with EDF was designed to measure and improve the environmental performance of KKR portfolio companies, according to the firm.
Given the nature of the SEIU’s campaign, there will certainly be more news to come. Stay tuned…
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