Apax, USBX, Arthur Anderson execs launch buyout firm(4)

Former Apax, USBX and Arthur Anderson executives have founded Egis Capital to take advantage of rising government spending in the defence sector. Next year the firm plans to raise a $200 million fund.

Former Apax partner Robert Chefitz, USBX founder and chief executive John Mack and former Arthur Anderson partner Joseph Falkenstein have launched a private equity firm that will target the commercial security and homeland defence sectors.

Egis Capital Partners has $40 million (€28 million) in dry powder that it raised from family offices and a “friends and family” fund; in the second quarter of 2008, the firm will market an institutional fund targeting $200 million, Chefitz said.

Egis will make investments of between $5 million and $40 million and act both as a lead investor and co-investor alongside larger funds. Egis has not yet made any investments, but Chefitz said the firm is “actively targeting around 30 different situations”.

“The security industry is experiencing double-digit growth fuelled by technology advances, convergence of logical and physical security and steady increases in government spending on homeland initiatives,” Falkenstein said in a statement. He added that the industry is tending towards consolidation.

At Apax, Chefitz focussed on the security sector and was involved in the acquisitions of Protection One, Casi Rusco and CML. Mack’s investment bank, USBX, also focussed on the security sector, while Falkenstein previously led Arthur Anderson’s private equity transaction support services support group.

Earlier this month, CM Equity Partners said it will back a management company, Laguna Ventures, to acquire and consolidate several companies that serve the US intelligence community and the US Department of Defense.