Private Equity Sees an Oligopoly Worth Disrupting: Chris Hughes

When private equity firms push into an industry, you know there are decent returns to be made. Just consider their enthusiasm for the arcane business of insuring corporate pensions.

A company’s retirement liabilities are a nightmare for the chief financial officer. They’re an imprecise long-term debt, introducing volatility to the company balance sheet. Regulation discourages investment in higher-returning assets like equities that would help pay the pension obligations when they come due. Hence CFOs are desperate to offload the burden to anyone who will take it on. The insurance industry is happy to oblige – for a fee.

The situation is exemplified in the plight of Walgreens ...