FAMILY CIRCLE

Asset Management Advisors (AMA), which manages nearly $11 billion (€8 billion) on behalf of 11 East Coast family offices, recently ramped up its private equity programme.

The firm hired a four-person team that formerly led SunTrust Equity Partners, a division wound down by the Atlanta-based bank, SunTrust, which owns 70 percent of AMA.

The team consists of Ted Mayden, Ken Millar, Jeff McNeill and David Cusimano, who, in their six years together at SunTrust Equity, committed more than $360 million to 42 venture capital and private equity funds. They averaged a 27 percent internal rate of return on investments, according to Andrew Mehalko, AMA's chief investment officer.

“We felt the need to bring in a team with some depth and experience to leverage relationships in the private equity side of the business,” says Mehalko.

AMA allocates approximately 40 percent of its families' capital to alternative assets. Though in the past 13 years or so has it has invested with big firms like The Blackstone Group and Oak Hill Capital, AMA has largely been opportunistic.

“In the past we've been missing opportunities because we didn't have the ability to write big cheques and we didn't have the industry experience,” Mehalko says. “The firm, in the early years, was small and we only had a few families, and therefore we didn't have enough size or scale to create a fund of funds or co-investment structure.”

AMA expanded significantly in 2001 from 20 employees to 250, and from less than $1 billion under management to $10.5 billion.

In June, it held two first closes on private equity vehicles, a fund of funds and a co-investment fund. Upon their final close, expected in the third quarter, they will together total about $100 million.

AMA's private equity team will make investments of up to $20 million each both directly and in various funds.

The new investment vehicles and the new private equity team that manages them will allow AMA better access to the world's best private equity players and create greater investment flexibility for its family offices, Mehalko says.

MORGAN STANLEY CLOSES FIRST DISTRESSED DEBT FUND OF FUNDS
Morgan Stanley Alternative Investment Partners has closed its first distressed debt fund of funds on $500 million (€366 million). The Morgan Stanley Global Distressed Opportunities Fund will offer investors access to distressed debt funds, focusing on turnarounds, debt-for-control and active trading in the US, Western Europe and emerging private equity markets in Asia and elsewhere. The fund will likely invest up to 20 percent in direct co-investments. Tom Dorr, chief investment officer, will head the fund. The new fund is the latest stage of the bank's re-emergence in the private equity world after pulling out of the market in 2004.

BAIN TARGETS FUNDS TOTALING $15BN
Just 18 months after raising $10 billion for its ninth fund, Bain Capital is approaching limited partners about its tenth private equity fund, which will seek to raise $10 billion (€7.2 billion) for a core vehicle and $5 billion for a co-investment fund. Bain is telling LPs that the co-investment fund may be heavily drawn from if the deal market keeps up its pace, or may remain untouched if the market tightens. As with previous Bain funds, the core vehicle will coinvest alongside regionally focused funds targeting Europe and Asia.

JMI DOUBLES UP WITH $600M CLOSE
JMI Equity has raced to a close of its sixth fund on $600 million (€437 million) and almost doubled its capital under management, just two months after launching the private placement memorandum. JMI Equity Fund VI is also double the size of the software- and business services- focused firm's last fund, which closed in June 2005. Harry Gruner, general partner and cofounder of JMI, said: “We had nearly 100 percent re-up rates from our existing limited partners and good interest from new limited partners.” Returning LPs include the Pennsylvania State Employees' Retirement System, which approved a commitment of up to $50 million, as well as the Los Angeles County Employees Retirement Association and Pathway Capital Management. New investors include Ohio State University and the New Mexico Public Employees Retirement Association.

BESSEMER CLOSES $1BN THIRD PARTY FUND
New York-based Bessemer Venture Partners has raised its first fund to include outside limited partners in addition to its longtime backer Bessemer Securities, the Phipps family office. The $1 billion fund was “significantly oversubscribed”, the firm said. Its LPs include family offices, universities and foundations. Approximately $350 million of the new fund is earmarked for India, where the firm opened offices three years ago. The firm plans to invest in companies that can service the growing Indian middle class, those involved in the infrastructure buildout, and companies that export knowledge-based services products, such as engineering and financial services.

CITI VETS WRAP UP $3.1BN
Court Square Capital Partners, formerly Citigroup Venture Capital, has reached a final close on its debut fund as an independent entity, rounding up a total of $3.13 billion (€2.27 billion). Court Square committed $207 million to the new fund, which drew significant support from high net worth individuals as well as institutional investors. The fund is thought to be the largest yet raised by a team of GPs that has spun out of a larger institution. The Court Square team members spun out of the bank last year.

EX-UBS PRO, FLORIDA BILLIONAIRE TO RAISE $1BN
Jeff McDermott, former co-head of investment banking at UBS, recently left the bank to start his own private equity firm alongside Florida billionaire Michael Heisley. The new firm, Stony Lane Partners, will focus on distressed investments, a strategy that Heisley has been following for more than 30 years at his own firm, Heico. “I feel very comfortable that we are very close to the top of the [US market] cycle,” Heisley said. Due to the high level of leverage in the market he predicts that when the market turns, distressed investment opportunities will be abundant.

Stony Lane began a road show in mid-July, at the end of which the firm's founders hope to have raised between $750 million (€552 million) and $1 billion.

GORES GROUP CLOSES SECOND FUND ON $1.3BN
The Los Angeles-based Gores Group has closed its second private equity fund on $1.3 billion (€967 million), more than three times the size of its first fund, which closed on $400 million in November 2003. The fund had an initial target of $750 million, but by the end of fundraising was nearly two times oversubscribed. The fund will acquire mature companies in the technology, industrial, telecommunications and services sectors. As with the previous fund, The Gores Group will seek control buyout investments in non-core, underperforming or undervalued businesses in the US and Europe.