DLJ ponders future fundraising

Nicole Arnaboldi-led DLJ Merchant Banking Partners' has experienced numerous departures over the past few years.

DLJ Merchant Banking Partners is pondering its future as it is close to exhausting its fourth fund.

The firm, acquired by Credit Suisse in 2000 and once one of the biggest private equity firms in the business, has been beset by departures and underperformance in recent years.

“We are not raising a new fund right now; we’ll see how the environment shapes up,” a DLJ spokesperson said.

DLJ Merchant Banking Partners IV raised $2.1 billion in 2006. Credit Suisse committed $700 million to $750 million to the fund, according a source and fund documents.

Fund IV, still technically in its J-curve phase, was being carried at a .70 multiple as of September 2009, according to a market source.

Nicole
Arnaboldi

A Fund IV limited partner told PEO they are disappointed with the fund performance, and unless there is a turnaround, the LP will not be committing to another DLJ Merchant Banking fund. “We’re just hoping to get our capital back,” the LP said.

The LP expressed concern that the senior leadership responsibilities of DLJ Merchant Banking have been “passed around”.

DLJ’s chief, Nicole Arnaboldi, has been named an executive chairman in asset management with Credit Suisse, and the LP said Arnaboldi has stepped back from the private equity group, handing over leadership to Susan Schnabel, a senior partner of DLJ.

The DLJ spokesperson disputed the idea that Arnaboldi’s role with DLJ has changed. Arnaboldi has served as

We're just hoping to get our capital back.

DLJ limited partner

chairman of DLJ’s investment committee, and will continue to serve in that role, the spokesperson said. Schnabel and Colin Taylor also have significant responsibility for managing day-to-day operations at DLJ, the spokesperson said.

Credit Suisse acquired DLJ in 2000. The team’s leader, Steven Rattner (different from the former head of The Quadrangle Group), left the firm in 2008 for personal reasons.

Former DLJ chief Thompson Dean left and founded Avista Capital in 2005 along with six other former senior DLJ partners. Former DLJ chairman Lawrence Schloss founded Diamond Castle Holdings in 2004 after departing from the group.

An affiliated DLJ real estate platform also is preparing to spin-out from the bank, according to PEO's sister web site, privateequityrealestate.com.