Private Investments, which include Private Equity funds, are overseen by Private Equity Firm fund managers. These managers often use investor money to take over companies and restructure them. 

Private Equity Firms raise money from investors such as pension fund managers, like the Oregon State Treasury (OST), kick in a little of their own, then often borrow heavily to buy companies. The general partner does not share in any losses if they occur. 

The Private Equity fund managers have sole decision-making power about how private investment funds are used.

Private Investments are just that – private.

• Most private investments are not listed on any public stock exchange so there is no way to know how much any investment fund is really worth on any given day.
• The terms of the investment are set by contract including how much is invested, management fees, length of commitment, return on investment, and secrecy about specific fund investments.
• Private investments also have protection in Oregon public records law to keep specific investments and terms of the contract confidential.

• Private investment funds are growing in size, complexity and number. U.S. private investment funds have gross assets under management of $17 trillion with net assets of $11.5 trillion, as of 2021.
• Public pension funds are footing the bill. Private investment limited partners are often retirement funds of public employees – with investment profits lining Wall Street’s pockets.
• Secrecy that is in direct conflict with the transparency required in a fiduciary or trustee relationship – like that between retirement plan managers and the state employees who are beneficiaries.
• Unknown Valuation or Performance Metrics: Private equity firms say what the private investments are worth, and that is the valuation retirement fund managers convey to the public. Significant research shows that private equity returns are no better than stock market investments, given the high fees. 
• Lengthy contracts: Investor funds may be tied up for a decade or more and this illiquidity makes it hard to respond to developments like climate risks or geopolitical shifts.
• Worse working conditions and wages of company employees. This happens when private investors 1) Slash costs by firing workers, cutting worker pay and ending long-term investment in the company, 2) transfer responsibility for debt they created to buy the company – to the company they bought, and 3) transfer money to themselves by charging multiple high fees with many names such as “management” and “consulting” fees, and hiding them in various aspects of a complicated deal, issuing generous dividends and selling company assets like real estate for short-term gain. 

See the federal Securities and Exchange Commission statements for an overview of key concerns about private funds (June 23, 2020 Risk Alert, January 27, 2022 Risk Alert, and November 10, 2021 letter from SEC Chair Gary Gensler). 

The report Private Equity Propels the Climate Crisis, by Private Equity Stakeholder Project (10/2021), describes  the risks of private investments’ massive exposure to the fossil fuel industry.

• An analysis of private equity firms shows they have invested around $1.1 trillion dollars into energy assets since 2010. That is double the market value of Exxon, Chevron, and Royal Dutch Shell combined.
• Private equity has pumped hundreds of billions of dollars into buying up offshore drilling in the Gulf of Mexico, propping up fracking operations, expanding infrastructure through pipelines and export terminals, spewing pollution from gas and coal power plants – and there are no comprehensive disclosures of their holdings, let alone of environmental and community impacts. 
• Since private investments are concealed, it is very difficult or impossible to track whether a public pension fund which holds private investments is increasing its support of the fossil fuel industry, or divesting.