P&I: Nonprofit Questions Dividend Recapitalization Play at Ares Portfolio Company

Pensions & Investments reports on the Private Equity Stakeholder Project’s scrutiny of private equity firms taking debt-funded dividends from health care companies they own, even as the world continues to battle the COVID-19 pandemic.

P&I, Apr 21, 2021: Non-profit questions dividend recapitalization play at Ares portfolio company

See also: Private Equity Has Already Reaped Hundreds of Millions of Dollars of Debt-Funded Dividends from Health Care Companies in 2021

and Dividend Recapitalizations in Health Care: How Private Equity Raids Critical Health Care Infrastructure for Short Term Profit.

P&I also noted PESP’s findings that one of the five healthcare companies that undertook a debt-funded dividend in the first quarter of 2021 also received $80 million in grants and loans under the Coronavirus Aid, Relief, and Economic Security Act: Ares Management Corp.’s private equity portfolio company DuPage Medical Group Ltd., a physician practice.

Moody’s Investors Service said of the debt-funded dividend: “It points to the aggressive nature of DuPage’s financial policies, a key governance issue. Combined with higher gross financial leverage, this will leave DuPage more weakly positioned to absorb any unexpected operating setback or incremental debt.”

Moody’s also said that DuPage’s policies could hurt stakeholders such as patients. “DuPage’s aggressive policies pose social risks as key customer relations stakeholders include patients, payors and government entities.”