Wednesday, April 11, 2007

Public Pensions Fund Private Partnerships

The battle of publicly funded pensions funds, your money and mine, being used in collaboration with private equity firms, hedge funds, to do leveraged buyouts needs to be seriously addressed, since those who pay into these funds have no controlling say over the fund managers.

As Robert Blackburn of New Left Review has written, the pension funds created over the past fifty years are huge new source of capital available for use to shore up capitalism.

But it is still public money, from union or public sector and government pensions. But without any meaningful corporate regulations giving the owners of these funds, us, any say in how they are invested. The democratization of public and institutional funds needs to be on the agenda of unions, the left, and the public. While institutional funds like pension funds call for their rights as shareholders, they do not allow their own shareholders the same rights of representation.

Teachers' BCE campaign gaining support

Some of BCE Inc.'s largest shareholders are lining up behind the Ontario Teachers Pension Plan and pledging to support the pension fund if it attempts to lead a takeover of the telecommunications company or even oust its embattled senior management.

Teachers, exasperated with BCE's weak stock performance under chief executive officer Michael Sabia, has already approached U.S. buyout firm Providence Equity Partners Inc. to explore a bid for the company worth close to $40 a share, according to sources.

That hefty price -- about a 30-per-cent premium to where BCE was trading last month -- could be enough to sway many of the company's long-suffering investors if Teachers decides to act. Although it chose not to submit a formal bid after BCE indicated it wasn't interested in selling, Teachers ratcheted up the pressure on the company in a regulatory filing this week by signalling its intentions to shift from a passive investor to an active one. Several investors said the only way BCE may be able to fend off an unwanted suitor now is for Mr. Sabia to step aside.

He said Teachers, like many investors, has become frustrated by what it views as unresponsive management and the glacial pace of Mr. Sabia's turnaround strategy.

In a filing with U.S. regulators on Monday, the pension fund said it was "exploring its options" regarding BCE, and sources confirmed it has been in contact with several buyout firms and pension funds in both Canada and the United States about the prospect of a takeover. The filing came less than two weeks after it was revealed that BCE had spurned another advance from private equity titan Kohlberg Kravis Roberts & Co., which has allied itself with the Canada Pension Plan Investment Board.

These sources described the KKR advance as a "wake-up call" for Teachers, which is bent on leading any privatization effort of the Montreal-based parent of Bell Canada. One person familiar with the matter said the $106-billion pension fund is dismayed by the cool reception its proposals have received from both Mr. Sabia and BCE chairman Richard Currie. Mr. Sabia and Mr. Currie could not be reached for comment.

"At some point the shareholders will speak," said one person familiar with Teachers' plans. "Boards of directors are supposed to represent the shareholders at the table."



AIM High

Your Pension Dollars At Work

P3= Public Pension Partnerships

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Renegade Eye said...

I don't believe you often see groups take such active control of their pension funds.

eugene plawiuk said...

The Teamsters have in the U.S. During the push against Apartheid institutional pension funds became the object of activist shareholder lobbying from churches, universities, etc. But again the core governance of institutional pension funds were not challenged to be put under stakeholder control. It is an issue whose time has come.

ilanit said...

All in all, the meat of the survey is pretty predictable, and for those who have been following Orange County equity investment environment - it should not be suprising. But more importantly, the survey does confirm that United States still needs to go a long way in developing its judicial system toward protection of rights as well as dealing with the tedious bureaucracy of doing business.