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Under new accounting regulations private equity will be required to declare over the next few weeks, the worth of the companies they have invested in. Previous to this new rule, private equity would only have to reveal the cost of portfolio companies on the sale of the investment. General Secretary of UNI Global Union, Philip Jennings says “These new reporting requirements are a step in the right direction. Since the financial crisis the value of these companies has fallen. Investors and workers of these companies do not have a clear idea about the stability and health of the company and they should know, as stake holders in the enterprise”



It is expected that the value of private equity portfolio companies may show a fall of 30% or higher. Public markets have dropped by 40%. It is predicted that some private equity firms may have even larger losses, having been purchased originally at a rate often 30% premium to public market levels. The added debt on top of this equation could extend the drop in value even further.



As a result of lower valued companies, investors are expected to sell secondary private equity holdings and engage in dialogue with firms about future investment. UNI Global Union has been engaging with pension funds investing in private equity, to ask them to seek information from private equity on the stability of portfolio companies. Under the new reporting rules investors will be advised of the new value of their portfolio. This will create an opportunity for investors to begin a dialogue with private equity and a chance to influence responsible investment decisions such as including UN PRI principles incorporating Environmental, Social and Governance issues into investment analysis and decision-making processes.