Los Angeles City Council pressures pensions to push Advent in union scrap

A raucous labor dispute in California is dragging in private equity.

The Los Angeles City Council would like the city’s public employee and police and fire pensions to address their concerns with a private equity manager the systems back – Advent International.

Specifically, City Council wants the two pensions to get specific answers from Advent on how it is working to resolve a labor dispute between its portfolio company Aimbridge Hospitality and the hospitality workers union UNITE Here Local 11.

But the two pension systems are reluctant to get too involved, they said in a letter to city council members. As limited partners, they said they are restricted from getting actively involved in the investments by limited partner agreements. The executive directors of each system signed the response to the council members.

“As LPs, our communications are done to ensure that we do not violate our responsibilities as a limited partner… which limits our involvement in the operations and management of the GPs fund,” said LA City chief investment officer Rod June at the system’s March 12 board meeting. Buyouts listened to a broadcast of the call.

According to Buyouts’ database, LA City has committed $240 million to seven Advent International funds since 2008, the most recent a $60 million commitment to Advent International GPE X in 2022. LA Fire has committed $65 million to three Advent funds.

Advent International declined to comment for this story.

Activist groups frequently pressure institutional investors to steer money in certain directions. However, it’s rare for municipal officials to intervene in the operations of city pension systems.

Aimbridge Hospitality

Advent International acquired a majority interest in Aimbridge in 2019, according to a press release from the manager. The previous owners were Lee Equity Partners and General Atlantic. Terms of the deal were not disclosed.

Aimbridge is a third-party hotel operator and manages more than 1,500 hotels across the globe, according to the company’s website. In February, the company announced the appointment of Craig R Smith as its new CEO.

UNITE Here members are seeking a new collective bargaining agreement with several southern California hotels operated by Aimbridge – with members commenting at several recent board meetings of both pensions about the issue.

The Los Angeles Times reported in the fall that hotels operated by Aimbridge Hospitality employed unhoused migrants to replace the employees who had gone on strike, which drew the attention of the six Los Angeles city council members who drafted the letter to the two pensions.

In their letter to the systems in the fall, six council members requested the pensions ask Advent International to provide details about what steps it was taking to resolve the existing labor disputes, as well as to avoid future issues at other hotels operated by Aimbridge Hospitality.

The letter also requested the systems ask Advent for details regarding staffing services used by Aimbridge, the number of minors employed at Aimbridge-operated hotels and any steps Advent has taken to ensure Aimbridge’s facilities have panic buttons and other protections against sexual assault.

However, both systems said that they’re limited in what they can address with Advent due to the LPA, which specifically prevents LPs from intervening in the daily operations of portfolio companies.

“As it pertains to Advent’s investment in Aimbridge, the LPA legally prohibits the plans from intervening in the labor dispute between UNITE Here and Aimbridge as requested,” said the letter signed by the executive directors of both pensions.

June added though that LA City has communicated to Advent International the concerns brought by UNITE members at recent board meetings.

“Advent is aware of what takes place in this board room and the testimony that has come forth,” June said.