Unions look to Japan in fight against private equity

Union movement looks to Japan in fight against private equity
By James Moore
Published: 08 June 2007
Independent UK

Unions have launched their latest broadside against private equity. UNI, the global union federation, has formed a task force with Japanese unions to fight attempts to buy out public companies.

UNI general secretary Philip Jennings also renewed his attack on the sector, describing it as "a financial virus" and the "new rocket fuel of globalisation".

The creation of the task force follows moves by the Japanese Government to make it easier for foreign interests to buy Japanese companies. The launch was the outcome of the first union seminar on private equity in Japan, attended by more than 100 people.

UNI has 14 affiliates in the country with more than 1 million members and each will appoint a delegate to the task force, which will have access to academic and financial experts with the aim of challenging private equity bids. It also plans to lobby pension funds, which are helping to fuel a buyout boom by investing in private equity with the hope of making substantial returns for members.

The moves come amid mounting anxiety about the activity of private equity worldwide. On Tuesday, the TUC will appear before the Treasury Select Committee to argue for measures to deal with what it describes as the "threats to the economy and workforce from the growth of private equity takeovers". They include an end to what it sees as favourable tax treatments and a requirement to inform and consult workers at companies subject to private equity takeovers.

Private equity activity has been growing in Japan, with names such as KKR and Permira setting up shop in Tokyo, although the Japanese media is hostile and managers have proved reluctant to sell to foreign-owned buyout firms in the past.

John Moulton, head of the private equity firm Alchemy Partners, hit back at the critics, saying it was wrong to make generalisations about private equity. He said: "The arguments are getting rehashed to the point of ludicrousness. To suggest all private equity is harmful is wrong and as for private equity being the rocket fuel of globalisation, I don't think it is actually making much difference to that.

"Like public companies, there is good and bad in private equity but in general private equity appears to give rise to companies that are run more efficiently and employ more people."

However, he did express some concern about private equity "mega funds" which have concentrated on huge buyouts, describing them as a "PR problem".