PGGM backs private equity regulation drive in Netherlands

José Rojo
12 November 2015

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PGGM, the manager of the second largest pension fund in the Netherlands, has endorsed a green paper by the country’s Labour Party (PvdA) targeting private equity houses with regulatory changes.

In a statement released earlier this week, PGGM's CIO for private markets Ruulke Bagijn welcomed Labour's plans (link in Dutch) to bring about the "changes private equity needs not to derail".

"We believe private equity must be more transparent, linking rewards to performance and having more focus on the long term," said Bagijn. "The sector is starting to move but it is slow. Lack of transparency will cause PGGM to rethink or stop investments."

Her remarks come three months after PGGM revealed it would no longer back fund managers failing to communicate fees by 2020. The entity, which currently has €186bn under management, warned at the time that it would seek to enlist fellow pension funds to fight against "unacceptable practices".

The demand for improved reporting on private equity fees and costs is also present in Labour's green paper. The party's intention to take on the industry first emerged in May, after private equity players were called to a roundtable with politicians. The initiative was put forward by PvdA MP and finance spokesman Henk Nijboer, who criticised the "unhealthy corporate culture" among private equity houses.

In September, PvdA's plans became firmer when the party produced a green paper with 12 proposals including the need to tackle "excessive external financing" of private-equity-backed buyouts and stronger information access for works councils.

The list, yet to undergo parliamentary debate, was met with disapproval from the Dutch Private Equity and Venture Capital Association (NVP). The industry body rebuked Nijboer's "populistic" tone and "inaccuracies" and claimed that an analysis of Dutch private-equity-backed companies had not unearthed any excesses.

NVP's reaction towards the Labour position was made public days before the association announced the appointment of former Dutch deputy prime minister Annemarie Jorritsma as chairperson.

The escalating controversy around Dutch private equity comes on the back of a wave of unsettling developments among private-equity-backed companies. The list, covered by the local media, includes HIG-owned Estro Group filing for bankruptcy and publisher NRC Media, which was burdened with debt while majority shareholder Egeria netted a €12.5m special dividend.

Egeria partner Caroline Huyskes-van Doorne was recently quoted in the press admitting "mistakes" had been made by NRC's shareholders and warning of a "perception problem" among Dutch private equity firms.