RICHMOND, Va. – Newly retired, Judy Pavlik was among hundreds of seniors who enjoyed the low-cost and friendly atmosphere at Plaza Del Rey, a sprawling mobile home park in Sunnyvale, California. Then the Carlyle Group acquired the assets and things began to change.
Pavlick’s fares increased by more than 7%. This was followed by an additional increase. She said the unexpected jump forced her and her neighbors, many on fixed incomes and unable to move, to sometimes choose between food and medicine.
The 2015 acquisition and subsequent sale of Pavlik’s Mobile Home Park is a core business practice for private equity firms such as Carlyle, which buys and restructures private companies to create value for their investors, sometimes in the process. cuts in jobs and services.
But the deal, one of hundreds Carlyle executed in recent years, could become a political obligation for Carlyle’s former co-CEO, Glenn Yunkin, who is now running as the Republican nominee for governor in Virginia and his experience. Highlighted “Building Businesses and Creating Jobs”. “
“They don’t know that these are people’s homes. We’re not just numbers on the spreadsheet,” said Pavlik, who is now 74. “He has no conscience.”
Beyond mobile home parks, Youngkin helped Carlyle make money for investors by targeting nursing homes, auto parts makers, energy companies, and even a business that’s more likely to be used by governments as “low-cost” businesses. lethal” weapons, which have advocated democracy. More than 1,000 jobs were moved offshore in recent years as companies were restructured. Hundreds more were closed after Carlyle instituted a series of cost-cutting measures at the nationwide nursing home chain; Complaints of deteriorating service and neglect followed.
There are no allegations of illegality or wrongdoing, but Youngkin’s political aspirations have drawn fresh scrutiny for his behavior at the Washington-based investment firm, where he raised more than $300 million before retiring as co-CEO last summer. Earned an estimated net worth of more.
Probably not, because former Republican presidential candidate Mitt Romney, now a Utah senator, has sought a higher office with such strong ties to the world of private equity. Romney also sold himself as a successful businessman and job-seeker, but stories of megadeals that regularly turn profits on people undermine his White House ambitions.
Youngkin now faces another wealthy former businessman, former Democratic Governor Terry McAuliffe, in November’s general election, which has already emerged as the nation’s top political contest for 2021.
While McAuliffe’s relationships with large donors and lobbyists are well established, Youngkin has only begun to face tough questions about his business background. His team declined to address any of Carlyle’s specific deal.
“As a young man, Glenn joined a small company and over the next 25 years helped the company rise to the top, helping it grow into a hugely successful enterprise that transformed good businesses into great businesses. gave, created thousands of jobs, and funded the retirement pensions of police officers, firefighters and teachers,” said Youngkin spokesman Macaulay Porter. “Under Glenn’s leadership, the Carlyle Group employed approximately 2,000 people and managed assets nearly four times the size of Virginia’s annual budget.”
Youngkin has made his business experience and position as a political outsider the focus of his pitch to voters. But more often, he discusses his career in broad strokes, without mentioning his high rank or even the name of his former firm.
He relies on the phrase “building businesses and creating jobs” when talking about his career, usually without specific details of the types of deals he’s seen.
Asked in a February interview with a former state lawmaker that circulated on social media how he saw the role of private equity in the economy, Youngkin replied: “We invest in companies, and we pick good companies. And try to make them great companies. And we do that by helping them expand, launch new products, see new futures, hire new people.”
While generating huge profits for the firm’s investors, Carlyle’s deals triggered a round of complaints from occasional layoffs, outsourcing jobs, and those directly served by the companies it acquired.
The former Democratic governor’s public disclosures show no current ties, but records show McAuliffe invested at least $690,000 in the Carlyle Fund between December 2007 and the end of 2016. The actual figure is likely to be much higher as the disclosures require candidates to admit only a wide range. Investment without any upper limit in some cases.
McAuliffe spokeswoman Christina Freundlich said McAuliffe had not made any investments in Carlyle since 2014, describing her as a passive investor with no role in drafting the deals. He said several major institutions, including the California Public Employees Retirement System, are among the investors.
“Glenn Youngkin’s record is clear: shipping American jobs overseas and harming seniors and homeowners, all to his own advantage,” Freundlich said. “Virginians deserve better than an extreme, Trump-backed job killer whose track record always puts his wealth first.”
According to Labor Department data, Carlyle invested in several companies led by Youngkin that moved at least 1,300 American jobs offshore.
These include Metaldyne LLC, a North Carolina car parts company that sent 176 jobs to Korea in 2008; Texas company Smarter Brands, which produced Class rings between 2005 and 2013 and sent more than 260 jobs to Mexico; and Ohio-based car parts maker Veyance Technologies, which sent nearly 300 jobs to Mexico between 2009 and 2011.
After their reorganization, all three companies were sold for hundreds of millions of dollars more than they acquired.
Veyance Technologies was among the companies McAuliffe invested in a large fund; This means he will profit from the deal.
A representative for Carlyle declined to comment for this story. The company’s leadership has at times struggled to defend some of its decisions.
In 2005 the firm acquired a minority stake in Combined Systems Inc., a “less-lethal” munitions manufacturer that produced tear gas and “super-sock bean bags”, which were later sold in Tunisia, Egypt and China. was used by governments to crack down on pro-. Democracy protesters.
Executives at Combined Systems said at the time that they could not control how their products were used. But the US State Department specifically condemned the use of excessive force against protesters in Egypt and launched an investigation into the misuse of tear gas after photos of CSI-branded tear gas canisters were published on social media.
By all measures, Carlyle is a giant in the private equity world, with 29 offices spread across five continents, with more than 1,800 professional employees. According to its annual report, the firm raised more than $27 billion in fresh capital in 2020. Despite what it described as a “tough environment” due to the pandemic, Carlyle gave its investors $762 million in distributable earnings last year, the highest in the past five years.
Youngqin joined the firm in 1995 and has steadily risen through the ranks in subsequent years, becoming head of the industrial sector’s investment team by 2005. By March 2011, he had become the Chief Operating Officer and within seven years, he was co-named. C E O.
Carlyle announced Youngkin’s retirement last summer, amid speculation that he might be interested in running for office. In the announcement, Youngkin said it was “the professional journey of a lifetime and it is my honor to be part of making Carlyle the global institution it is today.”
According to reports published at the time, Youngkin’s annual compensation package reached $17 million in 2019, his last full year at the company. That same year, Carlyle sold Sunnyvale’s Plaza del Rey for $237 million after buying it for $152 million four years earlier.
Acquiring the high-end mobile home park, now known as manufactured housing, was part of a broader strategy for Carlyle that included larger properties in Arizona and Florida. Such investments are an emerging trend among private equity firms, which have recently recognized the investment potential in mobile home parks.
Elizabeth Warren, D-Mass., have accused the firms of preying on aging residents with stagnant income streams and limited options for relocating when rents and fees rise.
Six years after Carlyle entered Pavlik’s life, she is still fighting rent and fee hikes, which continued to grow after Carlyle sold his community to another out-of-state investment firm two years ago.
“This park was called the park at heart,” Pavlik said. “They turned everyone’s happy home upside down.”
People reported from New York.