Limited partners for TPG Capital and Apollo Global Management are putting pressure on the private equity firms to change the way they draw fees from debt-laden casino operator Caesars Entertainment, Reuters has reported.
Apollo and TPG Caesars private in 2008 for $30.7bn and earlier this year restructured the loss-making company to address its $24bn debt.
Since the acquisition, for which they charged a $200m transaction fee, the two firms have drawn around $30m a year in monitoring fees, a process which has come under fire from US public pension funds the Employees’ Retirement System of Rhode Island and the Oregon Public Employees Retirement Fund for “misalignment of interests”.
Rhode Island General Treasurer Gina Raimondo has called on TPG to share this fee with its LPs. A letter from Raimondo to TPG seen by Reuters, said, “While I understand investing entails risk and not every investment will work, I expect us to sink or swim together,”
“The clear misalignment of our interests in TPG (Partners) V’s investment in Caesars Entertainment is problematic”.
Oregon State Treasurer Ted Wheeler previously wrote to both Apollo and TPG, again referring to concerns of the alignment of interest regarding the fees. OPERF has committed $300m to TPG V and $200m to Apollo Fund VI.
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