A history of brilliant turnarounds

PEO's North American Private Equity Personality of the Year 2003 Award goes to David Bonderman of Texas Pacific.

Friends call him Bondo. And from the looks of it, a lot of people wanted to be David Bonderman’s friend in 2003.

His Fort Worth, Texas- and San Francisco-based buyout firm saw blockbuster demand from limited partners eager to commit capital to Texas Pacific Group’s fourth private equity fund, which ended up closing earlier this year on $5.3 billion (€4.2 billion). The fund, in fact, won our award for North American Private Equity Fundraising of the Year.

Not everything David Bonderman touches turns to gold, but his history of brilliantly executing turnaround investment strategies is such that his backers are willing to give him the benefit of the doubt.

Bonderman began his investing career working for Texas’ oil-enriched Robert M. Bass Group. He parlayed his success there into the establishment of an independent firm in 1993 with friends James Coulter and William Price. The three still run the firm, but have taken pains lately to institutionalise its investment approach.

Texas Pacific scored a huge early success with its investment in bankrupt Continental Airlines. An initial stake worth $40 million grew to be worth $400 million. Bonderman stepped down as a Continental board member early last year amid controversy surrounding his firm’s stake in a competing airline, America West.

Last year, under Bonderman’s details-obsessed watch, Texas Pacific was on an absolute tear on both sides of the Atlantic. In the US, the firm agreed to buy Portland General Electric from Enron for $2.35 billion. It bought specialty chemical company Kraton Polymers from New York-based private equity firm Ripplewood Holdings for $770 million.

In the Europe, where the firm is best known for a heady $400 million profit from its investment in Punch Taverns, Texas Pacific last year joined with CVC Capital Partners and Merrill Lynch Private Equity, in a winning £1.72 billion ($2.9 billion) bid for retailer Debenhams. The firm also bought Gate Gourmet, an airline catering company, from Swiss Air.

Bonderman also led a daring but unsuccessful bid for bankrupt US Airways, and a similarly brash attempted buyout of France’s Vivendi Universal for $15 billion in partnership with oil tycoon Marvin Davis, The Carlyle Group and Bain Capital.

Texas Pacific was also part of the group of investors that profited greatly from the buyout and IPO of disk-maker Seagate Technology. Its other notable current holdings include Burger King and retailers J. Crew and Bally.

Bonderman hails from Seattle, where, in 1963, he graduated from the University of Washington. Three years later he graduated magna cum laude from Harvard Law School. After teaching for a year at Tulane University’s law school in New Orleans, Bonderman worked as a special assistant to the US Attorney General on civil rights issues.

Until Bonderman was hired by the Bass family in 1983, he worked and eventually became a partner at Washington DC law firm Arnold & Porter, where he specialised in bankruptcies, antitrust and securities cases.

Bonderman’s aversion to publicity and intense deal pace might indicate to the casual observer an all-work-and-no-play personality. However, nothing could be further from the truth.

Colleagues have reported receiving correspondence from Bonderman over the years as the LBO veteran has trekked through remote areas of the world, including Nepal, Pakistan, Afghanistan and Bhutan.

His parties are legendary – and we’re not talking about parties in the 1960s. In 2000, shortly after raising $4 billion for Fund III, Bonderman rented out the San Francisco City Hall and hired rock band The B-52s to entertain the crowd.

But that bash was afternoon tea compared to what came two years later. In late 2002, to celebrate his sixtieth birthday, Bonderman threw a party for 300 friends in Las Vegas that reportedly cost $10 million, most of which went to pay the evening's entertainment – the Rolling Stones. Musician John Mellencamp and comedian Robin Williams warmed up the crowd.

A Rolling Stones fan website, citing people who attended the party, reported: “You might expect such a crowd of specially invited party people to make a quiet show, but they really got into the show.”

As the Stones would say, you can’t always get what you want, but if you’re David Bonderman, you can get pretty close.