April 8, 2016
Luca Moglia - Guadeloupe Basse Terre Caribbean

Who pays the costs of LGP’s trips to tropical islands, ski destinations, portfolio companies, unconsummated deals?

Leonard Green & Partners’ March 2016 ADV brochure amended language about how it bills for private class travel. FAA data shows trips to tropical islands, ski destinations, cities with portfolio companies and other regions.

A new report about the policy changes is available here.

New ADV language says travel rates billed to Funds like GEI VII and portfolio companies (and thus LPs) will “not exceed a first-class equivalent fare.” The 2015 ADV brochure’s language did not specify first-class rates, instead the same paragraph read “Such expenses include business, first, or private class travel.”

  • Why did Leonard Green make these changes in the 2016 ADV Brochure?
  • Do prior billing practices differ from the new language, and it so, how?

Leonard Green has faced questions about which flights were billed to portfolio companies, funds like Green Equity Investors V or VI, or were related to unconsummated deals.

Leonard Green told Private Funds Management: “We, Leonard Green & Partners, pay virtually all (98 percent last year) of the costs associated with private air travel. Our investors were charged nothing”.

However, at least one limited partner reports being told LPs are charged a pro-rata portion of costs related to unconsummated deals (at the rate of first class travel). LPs have also reported that portfolio companies reimburse Leonard Green for travel (at the rate of first class travel).

A list of 100 trips is available below. Some include multiple legs of travel that may have each been billed differently.

Trips include:

  • 5 trips to the Bahamas – four trips had stops in cities with a portfolio company, or where partners sit on the board of a former-investment.
  • Three trips to South Bend, IN during dates when a Notre Dame football game was taking place.
  • At least five trips with stops in Aspen, and at least four with stops in Vail, CO.
  • A trip to Mendocino, where a Leonard Green partner owns a residential property, with stops at the Truckee Tahoe airport and Monterey for a day, before returning to Santa Monica for 5 days. Then returning to Mendocino for one night.

We encourage LPs to submit the below trips to Leonard Green and request full disclosure on whether the purpose of travel was business or personal, and how flights are ultimately paid (billed to portfolio companies, a GEI fund, or limited partners).

Click here to download an Excel spreadsheet copy of the 100 trips.