LOS ANGELES--(BUSINESS WIRE)--Leonard Green & Partners is marketing its new buyout fund, Green Equity Investors VII, with a target of $7.5 billion, during a period of growing regulator and limited partner scrutiny.
Leonard Green’s 2015 Form ADV discloses that it may charge portfolio companies accelerated monitoring fees, private class travel and fees for deal sourcing that have been criticized by regulators and investors, as examined in a new report by UNITE HERE, available here: http://www.pecloserlook.org/wp-content/uploads/LeonardGreen_Fee_Disclose121415.pdf.
Leonard Green further disclosed that it charges portfolio companies fees that do not offset management fees, including for private class travel. Recent filings with the Federal Aviation Administration (FAA) show that currently Leonard Green owns three private jets for an investment staff of around 40.
The SEC as well as institutional investors have recently pressed private equity managers for greater disclosure, particularly on fees, to ensure alignment of interests.
Questions for investors:
- Why did Leonard Green & Partners wait until 2015 to disclose the collection of accelerated monitoring fees when it had engaged in the practice at least as far back as 2010?
- When does Leonard Green choose to use accelerated monitoring fees? For which investments are accelerated fees appropriate?
- How has Leonard Green disclosed which fees will offset limited partner management fees and those which do not?
- How does Leonard Green disclose payment for costs associated with its private jets?