Credit Suisse First Boston has finalised plans for DLJ Merchant Banking Partners, its buyout business, following an earlier announcement that current DLJ head Thompson Dean is leaving to raise his own fund.
According to a statement issued today, CSFB will not spin off the buyout unit. Instead, 30 DLJ professionals, led by Steven Rattner and including Colin Taylor and Susan Schnabel, will remain to oversee DLJ’s existing portfolio companies spread over three funds.
In addition, CSFB said it would continue fundraising for a fourth DLJ private equity vehicle. The statement outlined that “(t)he firm plans to continue building its private equity business, consistent with the strategy it announced in December 2004. …(DLJ’s) future funds will focus on middle market buyouts, selective minority investments in larger buyout transactions, and growth capital and structured equity investments.”
Originally, CSFB had unveiled plans in December to split off DLJ as a standalone business. That move came after a number of large leveraged buyouts firms, which had lost to DLJ in the auction for UK pharmaceuticals company Warner Chilcott, reportedly told the investment bank that they did not appreciate being outbid by a CSFB private equity vehicle when they were paying the bank millions of dollars in fees.
However, CSFB reneged on spinning out DLJ by the end of January, opting to keep a scaled-back buyout operation instead.
According to the bank, Dean will leave CSFB around mid-year, along with several DLJ colleagues, to establish a new private equity firm called Avista Capital Partners. Reportedly, Dean is looking to raise a $2 billion (€1.5 billion) fund, an undertaking in which Steven Webster, OhSang Kwon, David Durkin, Larry Pickering, David Burgstahler and Jimmy Finkelstein will join him.
According to the CSFB statement, Dean and his team will continue to work with CSFB as consultants to assist in monitoring a number of the existing DLJ portfolio companies.
Last summer, DLJ lost some of its most seasoned dealmakers to Diamond Castle Holdings, a new buyout business headed by former DLJ head Lawrence Schloss. The defectors included Andy Rush, Mike Ranger, David Wittels and Ari Benacerraf.