Think of it as a private-to-public deal. Cesar Baez, a former principal at Texas buyout firm Hicks Muse Tate & Furst, has landed at the New Jersey Department of the Treasury to help the state build a brand new private equity programme – one that is likely to rank among the biggest in the world.
The $73 billion (€57 billion) New Jersey public pension – the eighth largest such institution in the US – is intent on diversifying beyond stocks and bonds, and has hired consultant Strategic Investment Services, a division of Russell, to create a new asset allocation plan.
The reborn New Jersey pension will have an allocation to private equity that may grow to more than $3.65 billion. And Baez, the pension's new head of alternative investments, will be in charge of it.
Baez was a partner of Hicks Muse' $1 billion Latin America fund until 2001, when a restructuring of the firm shut down the New York office, out of which Baez operated. Another partner in the New York office, Michael Levitt, also lost his job.
For his next act, Baez partnered with two radio executives in the formation of Amigo Broadcasting, a radio platform company that acquired two middletier English language radio stations and converted them to Spanish-language formats. A majority stake in the company was sold last spring to the State of Wisconsin Investment Board.
At Hicks Muse, Baez participated in several major Latin American investments, including the $4 billion buyout of Argentine telecommunications conglomerate CEI Citicorp Holdings, as well the purchase of the broadcast rights of the Corinthians and Cruzeiro, two Brazilian soccer teams.
New Jersey state treasurer John McCormac had been looking for someone to lead the state's plunge into private equity. McCormac, appointed by Democratic state governor James McGreevey, along with the 11-person state investment council, are eager to create a pension that is less tied to the stock market's surges and swoons. The council is chaired by Orin Kramer, a hedge fund manager and a former director of the White House domestic policy staff under President Jimmy Carter.
McCormac knows Baez, a fellow resident of the Garden State, through social circles.
New Jersey's thirst for alternatives comes on the heels of a policy change across the Hudson River, where the New York City Office of the Comptroller is studying a plan to dramatically increase its own allocation to alternatives. New York's comptroller coordinates the investing of five separate pension plans that together represent roughly $75 billion in assets.
TEXAS PACIFIC RAISES $5.3BN FUND IV
The private equity buyout colossus beat a $4.5 billion (€3.58 billion) target set last March. Non-US investors accounted for approximately 30 percent of capital commitments to the fund, one of the largest to be raised in private equity history. Fort Worth, Texas-based TPG attributes its success to a greater emphasis on succession planning and operations, as well as a strong track record marked by the successful IPOs of Seagate Technology, Petco Animal Supplies and MEMC Electronic Materials and the sale of a stake in travel Web site Hotwire.com. See page 70 for more on TPG.
new enterprise 11 raises $1.1bn
The Reston, Virginia venture capital mega-firm spent six months raising Fund 11. The latest fund had more non-US investors than any of NEA's previous funds, with 17 percent of capital committed to NEA 11 coming from non-US sources. The new fund is less than half of NEA's previous vehicle, which closed at the end of September 2000 on $2.3 billion (€1.83 billion).
RIVERSIDE CLOSES $750M FUND
Providing yet another example of successful fundraising efforts in leaner times, New York- and Cleveland, Ohio-based private equity firm The Riverside Company completed fundraising for its 2003 Riverside Capital Appreciation Fund on $750 million (€590 million). Riverside launched the fund in late June 2003 with a target of $600 million, and secured a final close in February, with nearly two-thirds of the committed capital coming from return investors. With more than $1.3 billion now in capital under management, the firm will continue looking for transactions valued between $10 million and $100 million.
KODIAK VENTURE FINDS $316M FOR FUND III
The Waltham, Massachusetts-based seed and early stage specialist drew capital commitments totaling $316 million (€251 million) for a fund that will make investments of between $250,000 and $10 million in the communications, semiconductor and software sectors in Canada and the US. The firm's previous fund closed in 2001 on $290 million.
TECHNOLOGY CROSSOVER WRAPS UP $900M FUND
After only four months of fundraising, the Palo Alto, California-based firm surpassed its original $800 million goal, closing its fifth fund on $900 million (€714million). The newest entity is almost half the size of the firm's previous fund, which raised $1.7 billion in April 2000. TCV will continue to invest in expansion and late-stage deals in communications, infrastructure, services and semiconductor companies, with plans to make capital commitments of between $10 million and $50 million in between 25 and 35 companies over the next three to four years.
EX-DRESDNER ENERGY GROUP CLOSES FUND
Boston-based Energy Investors Funds Group (EIF Group) has closed a $250 million (€197 million) private equity fund, United States Power Fund, for investment in electric power generation facilities, project development companies, privatized power assets and ‘clean’ energy projects. EIF Group also announced its 100 percent acquisition of a stake in the firm held by Dresdner Kleinwort Holdings, a division of Dresdner Bank. Its managing partners are John Buehler, Terry Darby and Herb Magid.
CHARLES RIVER CLOSES 12TH FUND
US venture veteran Charles River Ventures has closed CRP XII on $250 million (€199 million). The closing of this latest fund brings the early-stage investment firm's total capital under management to approximately $1.6 billion. The firm's 11th fund closed in February 2001 on $1.2 billion, but was downsized to $450 million in May 2002. Founded in 1970, Charles River Ventures invests with entrepreneurs operating in the data communications and software and services sectors. Past investments include Cascade, Chipcom, CIENA and Sonus Networks. Earlier this month, the firm hired former Mohr, Davidow Ventures general partner George Zachary as a venture partner.