The US private equity industry draws professionals from many prestigious institutions – Harvard business school, McKinsey & Company, Lehman Brothers … and the San Francisco 49ers.
Yes, the Bay Area football team, in addition to its five Superbowl victories, has produced no fewer than two star quarterbacks who later went on to found private equity firms. First was Joe Montana, who co-launched Champion Ventures (now HRJ Capital), a Redwood City, California fund of funds manager.
Then came Montana's pigskin-tossing successor, Steve Young. Since retiring from the 49ers in 1999, Young has helped launch three private investment firms. Even while playing football, he was an investor in numerous entrepreneurial ventures.
Upon bidding farewell to his highly successful career in professional sports, Young co-founded Northgate Capital, a fund of funds. Later, with entrepreneur friend Richard Lawson, Young co-founded venture investment firm IRR Partners.
Now, Young has teamed up with several Salt Lake City, Utah, business luminaries to form one of the few substantial buyout firms focused on the Western US. Sorenson Capital last month announced a final close on $250 million (&€209 million) for investments in small and middle-market companies throughout the “Intermountain” region of Utah, Colorado, Nevada, Idaho, Montana and Wyoming. The only other sizeable buyout firm focused on this large geographic area is Denver-based KRG Captal.
Sorenson Capital's other general partners are Ron Mika, a former Bain Capital managing director; Richard Lawson, the former president of Found, an e-commerce services provider; Tim Layton, former president of Medeco Security Locks; and Fraser Bullock, the chief operating officer of the 2002 Salt Lake Winter Olympics.
The firm was seeded with an investment from Utah's Sorenson family, heirs to the medical device fortune built by James LeVoy Sorenson. Another key backer is Robert Gay, a Bain Capital managing director.
Young's roots in Utah are deep – he was born in Salt Lake, attended Brigham Young University in nearby Provo, and is a descendant of the school's namesake, who first led Mormon pioneers to the Utah Valley.
“Steve's fabulous personal network is currently among his primary assets,” says Bullock. “But he's also an astute investor, having been involved in the private equity world for 15 years.”
RIPPLEWOOD, MIDOCEAN IN GLOBAL PACT
The two buyout firms have announced plans to team up on deals and create a global private equity entity operating in North America, Europe and Asia. Ripplewood and MidOcean have also announced their intention to raise a joint fund under the Ripplewood Holdings umbrella, though each will continue to operate independently for the time being. New York-based Ripplewood, with operations in Tokyo, is led by Timothy Collins and is one of the most influential private equity groups in Asia. MidOcean Partners, headquartered in New York and London, is headed by Ted Virtue, who co-led the firm's spinout from Deutsche Bank last year.
NVCA APPOINTS NEW CHAIRMAN
James Breyer, managing director at Silicon Valley venture capital firm Accel Partners, will head the National Venture Capital Association for the coming year. Breyer replaces Warburg Pincus' Jeffrey Harris as the US venture capital trade organisation chairman, a position which lasts one year. Part of Breyer's focus during his term will be preserving the use of employee stock options for emerging growth companies, a hot topic among venture capitalists and entrepreneurs, in light of government action to mandate stock option expensing for private companies.
LOREN BOSTON JOINS MERRILL PLACEMENT ARM
The former head of Citigroup Global Market's private equity fund placement business has joined Merrill Lynch as managing director and head of private equity origination. Boston's appointment is coupled with the promotion of Michael Ricciardi to head of Merrill's private equity sales. Both Boston and Ricciardi will report to Kevin Albert, the longtime head of the placement business. The management changes are part of the bank's preparations to “beef up” its fund placement capabilities for an anticipated burst in private equity fundraising activity later this year.
CSFB REPLACES QUELLA WITH OPERATING THREE
DLJ Merchant Banking Partners, part of CSFB Private Equity, has appointed three new operating chiefs – Ron Beegle, James Finkelstein and Larry Pickering. The three fill an operating void left by James Quella, who quit CSFB last month to head up portfolio company monitoring at New York's The Blackstone Group. Beegle, formerly senior vice president of Banana Republic, will be DLJ Merchant Banking's chairman of the retail and consumer group. “Jimmy” Finkelstein will be chairman of the media group, following 19 years of heading the National Law Publishing Company and a stint as chief of Marquis Who's Who. Johnson & Johnson veteran Pickering will lead the healthcare group.
FORMER PRIMEDIA HEAD TEAMS WITH SPECTRUM
Leveraging his industry specific experience as co-founder and former head of targeted media company Primedia, Charles McCurdy is teaming with Boston and Menlo Park, ([A-z]+)-based Spectrum Equity Investors to create an “investment initiative” that will commit between $175 million and $200 million (&€146 million and &€166 million) in niche media and publishing companies. Through a management and investment firm called Apprise Media formed this past winter, McCurdy will invest in and manage businesses similarly to those he worked with at Primedia, including business-to-business magazines, consumer guides, specialty videos, supplemental educational publishing and related activities. The firm will continue the strategy engaged at Primedia, which consisted of buying platform companies and developing them through subsequent acquisitions in the range of $2 million to $20 million.
AMERICAN CAPITAL NAMES LA HEAD
The Bethesda, Maryland-based publicly traded business development company named Frank Do senior vice president and managing director to lead its Los Angeles office. Do joined American Capital as a principal in January 2002, prior to which he served as a general partner at Westar Capital, a private equity firm based in Los Angeles and Orange County, California. He has also served as a principal at Chase Capital Partners.
PRISM CAPITAL NABS GOLUB PARTNER
Bill Harlan will serve the ([A-z]+)-based private equity firm by focusing on originating and executing mezzanine investments in support of acquisitions, management and leveraged buyouts. Prior to joining the lower middle market specialist, Harlan was in charge of the Chicago office of Golub Associates, which provides subordinated debt, junior secured debt and minority equity capital to middle market companies. He was also principal at CID Equity Partners, both a mezzanine and private equity firm.
PROBITAS' DEPONTE NAMED PARTNER
The San Francisco-based placement agent and private equity consultant has named Kelly DePonte a partner. DePonte joined Probitas in 2001 as global head of research and due diligence. DePonte is in charge of identifying and conducting due diligence on private equity funds, as well as leading the firm's research efforts. Prior to joining Probitas, DePonte as chief operating officer and managing director at La Jolla, California-based private equity consultant Pacific Corporate Group. Probitas, with additional offices in New York and London, has raised more than $3 billion (&€2.5 billion) in private equity capital across a diverse array of strategies and the firm also advises on secondary transactions.
At the International Finance Corporation's Global Private Equity Conference in Washington, DC, the founders of EMPEA (ehm-pee-ah), the Emerging Markets Private Equity Association, announced a newly minted board of directors, made up of investors including the IFC's director of private equity, Teresa Barger; academics like Roger Leeds, a professor at Johns Hopkins SAIS; and GPs like Thomas Barry, Chairman of Zephyr Management.
EMPEA is the brainchild of Barger and Leeds, who decided that the emerging markets private equity industry needed an independent group to take a leadership role. EMPEA will be open to any organisation active in emerging markets private equity. Part of EMPEA's mission will be to establish standards and best practices among its members. The group will also liaise with governments in developing countries to make sure that officials are warm to private investments.
The IFC recently commissioned consultant Cambridge Associates to study the performance of these funds. The results indicated an emerging asset class – based on a database of 90 emerging markets funds going back to the mid-1980s, Cambridge Associates counted $27 billion in total contributions, with distributions of just $11 billion. The top performers in the emerging markets space outpaced the middling and weak firms by an enormous margin. The EMPEA will seek to promote the practices of these top firms and will not shed tears as the weaker ones gradually disappear.