Saturday, September 30, 2017

S&P Pushes Back Against PEU Unitholder Structure

While lenders kowtow to private equity underwriters (PEU) with low to no covenant debt one organization pushed back ever so slightly.  Barron's reported:

Most alternative managers have a dual-class or similar structure at the public entity level that confers limited or constrained voting rights on public holders, and S&P recently stated that they would no longer add companies with dual-class structures to their indices. This decreases the likelihood that alternative managers would be added to market-cap-weighted indexes such as the S&P 500.
The article added:

Alternative asset management firms such as Blackstone Group (BX), Carlyle Group (CG), and KKR (KKR) might consider converting to a C corporation status, which could make it easier for investors to own them.  
That might happen after founders cash in their billion dollar personal stakes.  PEU founding fathers won't give up control.  Amierica's dual class is exemplified in the world of finance.