(Bloomberg) -- Private credit firm Pemberton Asset Management has got into a scrap with an unlikely adversary — one of the UK’s largest trade unions.
Unite the Union is protesting against the London-based credit specialist over its management of a maker of ready meals called Oscar Mayer, which Pemberton took control of last year. The UK firm, which has no relation to the American company that sells bologna, supplies supermarkets including Tesco Plc and J Sainsbury Plc.
Unite accuses Oscar Mayer of trying to fire and rehire its employees, as well as plans to remove some paid breaks, reduce other breaks and deprive staff of any extra pay and days off for working holidays. That’s led members of the 1.1 million-strong union to protest outside Pemberton’s offices in recent weeks, as Oscar Mayer workers take strike action.
The furor is over a relatively small commitment for Pemberton, which has raised about $22 billion since it was founded by veteran debt banker Symon Drake-Brockman in 2011. But it highlights how private credit’s meteoric growth is thrusting shadow lenders into a sometimes harsh public glare.
Picketers are just one of the costs that come with private credit’s bigger role in the financial system. Top financial regulators around the globe are also taking a closer look at the $1.7 trillion industry trying to supplant banks as the go-to source of corporate buyout loans.
The clash also underscores how private lenders are increasingly confronting the realities of running businesses, rather than just lending them money.
Taking the Keys
“It is Pemberton that is responsible for the horrendous attempt to fire and rehire staff,” said Sharon Graham, general secretary of Unite, in a statement to Bloomberg News. “Pemberton’s actions through Oscar Mayer are totally and utterly wrong and Unite will ensure that every individual and organization associated with it are made aware of its abhorrent behavior.”
A Pemberton representative said the firm has injected more cash into Oscar Mayer since taking it over, while “actively supported the management in taking the necessary actions to help navigate a number of challenges and ensure a viable future.” Those actions will help stabilize the business and create local jobs, the representative said.
Private credit funds typically don’t get involved in day-to-day management. But many businesses fell foul of loan agreements as the costs on their floating-rate debt ratcheted higher along with interest rates, and had to cede control to lenders.
In Oscar Mayer’s case, Pemberton found itself running the ready-meal company after staff shortages fueled by Brexit and a spike in inflation forced the business to restructure its debts, according to filings. Its principal lender, Pemberton, converted some of the borrowings into equity and became the majority owner of the business.
Deals
- The Florida State Board of Administration is looking to sell a bundle of private credit stakes worth as much as $4 billion in what would be one of the largest deals of its kind
- Monarch Alternative Capital and Silver Point Capital led a $750 million private credit deal to refinance debt of Sycamore Partners-backed Pure Fishing Inc., after the company’s broadly syndicated loan traded down into stressed levels
- Sports Illustrated’s secondary ticket marketplace is looking to drum up cash from direct lenders to fund a potential acquisition of Anytickets.com, another ticket seller
- Textile company Lycra Co. is sounding out investors on a private deal that would help it refinance the most senior part of its debt
- French investment firm Wendel has agreed to acquire a majority stake in private lender Monroe Capital for $1.13 billion to extend its reach to the booming private credit category
- Money managers once known for providing capital to businesses that couldn’t get bank financing are vying to lend to the world’s top-rated companies
- Banks and private credit firms are competing to provide at least $5 billion of debt financing to help fund a potential buyout of Bausch + Lomb
- Loans tied to significant risk transfers have reached about $1 trillion as deals are running at the fastest pace on record for the fourth year in a row
- Sixth Street Partners is among the direct-lenders providing a $900 million unitranche loan to back General Atlantic’s acquisition of a minority stake in US treasury-management software provider Kyriba Corp.
- Banco Santander SA is reaching out to investors about a potential significant risk transfer linked to a portfolio of about £1 billion of loans out of its UK unit
Fundraising
- LCM Partners Ltd., an alternative asset manager partly owned by Brookfield Asset Management, is raising €6 billion for a new fund that will partly invest in non-performing loans
- Paul Weightman has set an ambitious target for the investment team he poached from Barings LLC earlier this year: raise more money than his now-archrival ever managed in direct-lending — in half of the time
- Some of Australia’s large institutional investors are looking for growth in the nascent local private debt market to take advantage of elevated interest rates and as banks shy away from riskier lending
- Firms that cater to the world’s ultra-wealthy are planning to boost their allocations to private credit, according to a survey of 250 institutional investors in the UK, Europe and the Middle East
Job Moves
- UK-based asset manager and advisory group Atrato Group has hired John Doyle and Daniele Iacovone to launch a private credit strategy
Did You Miss?
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- EQT Is Unfazed by Private Credit Craze Even as Rivals Pile In
--With assistance from Kat Hidalgo.
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