The Colusa and Rincon Native American Indian tribes have decided to stop placing all their bets on casinos and have turned to private equity to diversify their holdings.
have turned to private equity to diversify their holdings. “Gaming has been good for us, but it's a one-trick pony,” Rincon chairman Vernon Wright said in a statement. “That's why we've made economic diversification one of our top priorities.”
California's Colusa Indian Tribe and the Rincon Indian Tribe have partnered with Wells Fargo Community Development Corporation to form First Nations Capital Partners, a $25 million (€17 million) private equity fund.
Partners, a $25 million (€17 million) private equity fund. “I am aware of several Indian tribes with direct investment platforms,” says Wells Fargo CDC president Bob Taylor. “But, to the best of my knowledge, this is the first commingled, multi-tribe private equity fund.”
Wells Fargo CDC, a subsidiary of US bank Wells Fargo, began looking at the possibility of raising a fund like First Nations in August 2006 when the firm's Native American Banking Group came to the CDC in response to demand for private equity as a source of diversification, according to Taylor.
The private equity fund may not produce as much revenue as the casino, Rincon finance committee member Steven Stallings says, but it is an “opportunity to acquire some businesses over the long run that will contribute to the economic well-being of the tribe”.
The three lead investors committed $5 million each. Other Indian tribes and nations are expected to commit $1 million to $5 million each and four to six high-net-worth individuals and family offices will commit a maximum of $250,000 each.
High-net-worth individuals and family offices will commit a maximum of $250,000 each. The fund will be managed by John Upshur of one-man private equity shop iAdmiral Capital, says Taylor. Upshur has a track record of equity investing in small businesses.
First Nations aims to make eight to 10 investments of $2 million to $3 million each in businesses with earnings before interest between $1 million and $50 million.
The Rincon Band of Luiseno Indians of Valley Center, California own Harrah's Resort and Casino near San Diego, which is part of Harrah's Entertainment. TPG's and Apollo Capital Management's $30 billion buyout of Harrah's Entertainment recently fell through due to turmoil in the debt markets.
The Colusa Indian Community Council is the governing body of the Cachil Dehe Band of Wintun Indians, which owns and operates the Colusa Casino Resort near Sacramento.
INDIANA PENSION COMMITS $145M TO THREE FUNDS
The Indiana Public Employees Retirement Fund (PERF) has committed $145 million (€94.5 million) to three private equity funds, underlining its intention to focus an increasing amount of its $17.2 billion fund towards alternative investments. Indiana PERF, which oversees the pension investments of more than 230,000 state employees, committed $75 million to Horsley Bridge IX, a fund of funds specializing in venture and growth investments; $40 million to Natural Gas Partners IX, an energy start-up fund; and $30 million to York Opportunity Fund, a distressed investment fund, according to the Board of Trustee's December minutes.
KNIGHT'S BRIDGE CLOSES FIRST FUND
Canadian mid-market specialist Knight's Bridge has closed its first ever independently raised North American fund within three months, with capital commitments of more than $62 million (€40.4 million). A subsidiary of Canada's Counsel Corporation, a $39 million publicly traded real estate and merchant banking firm, Knight's Bridge Capital Partners Fund I was raised within three months and without the assistance of a placement agent. The firm said it will generally pursue equity-oriented investments of up to $10 million in small to mid-market businesses in Canada and the US.
SILVER LAKE WRAPS THIRD FUND ON $9.3BN
Silver Lake has closed its third buyout fund on $9.3 billion (€6.1 billion), sources at Merrill Lynch, the fund's placement agent, have confirmed. Though the sources wouldn't discuss the tech-focussed vehicle's marketing timeframe, they said “it was relatively short given the size of fund raised”. The California buyout firm's initial target for the fund was $10 billion – a steep increase from its second fund, which closed on $3.6 billion in April 2004. Limited partners in past vehicles have included the Illinois State Teachers' Retirement System, the New Jersey Division of Investment, the Indiana Public Employees Retirement Fund and Finnish insurance firm Ilmarinen Mutual Pension Insurance Company.
KLEINER PERKINS LAUNCHES $100M IFUND
US venture capital firm Kleiner Perkins Caufield & Byers has teamed up with iPhone maker Apple to launch the $100 million (€65 million) iFund. Kleiner Perkins will manage the fund with Apple providing “market insight and support”, according to a statement. Apple is linked to Kleiner Perkins via former US President Al Gore, who is on the Apple board of directors as well as a partner at Kleiner Perkins. Gore will not be involved in managing the iFund. The iFund will back companies building applications, services and components for the Apple iPhone and iPod touch platforms, regardless of stage and size.
NEW MOUNTAIN RAISES $5.1BN FUND III
New Mountain Capital, a New York private equity firm, has closed its third fund with total commitments of slightly more than $5.1 billion (€3.3 billion), according to the firm's founder Steven Klinsky. New Mountain raised $1.55 billion for its previous fund, which closed in 2004. The new fund began fundraising last summer with a target of $3 billion. Credit Suisse acted as placement agent for the vehicle. The firm pursues growth investments in defensive sectors such as education and healthcare. The California Public Employees' Retirement System was a major early backer of New Mountain Capital. The pension committed $400 million to the latest New Mountain private equity fund, and a total of $250 million to the two prior funds.
W CAPITAL CLOSES ON $700M
New York-based W Capital Partners, a private equity direct secondary investment specialist, has raised $700 million (€455 million) for its latest fund. The firm, led by co-founders David Wachter, Robert Migliorio and Stephen Wertheimer, typically acts as a “replacement GP” in syndicated growth equity and venture capital deals by purchasing these stakes on the secondary market. The firm's last fund raised $250 million in 2004. The new fund, placed by Probitas Partners, drew commitments from endowments, foundations, financial institutions, family offices, public and private pensions and funds of funds around the world, according to a press release. The secondary market for interests in private equity deals and funds has grown as investors have increasingly sought tools to more actively manage their private equity portfolios.
TALENT AGENCY TEAMS WITH VENTURE FIRMS
William Morris Agency, a Hollywood entertainment firm, has teamed up with Silicon Valley venture capital firms Accel Partners and Venrock to form a joint investment vehicle to provide seed and growth capital to consumer technology companies in Southern California. The total size of the fund was not disclosed Global telecom company AT&T will participate in select investments made by the fund. AT&T opted not to be a general partner in the fund in order to avoid potential conflicts of interest should the fund invest in its competitors.
MARYLAND UPS PE ALLOCATION
Maryland's State Retirement Agency has increased its target allocation for private equity to 5 percent from 2 percent. Acting chief strategist of the $37.5 billion (€24.3 billion) fund, John Greenberg, told PEI the increase followed a wider asset allocation study conducted on Maryland's behalf. The amount of new capital available to private equity is approximately $1.1 billion. The Maryland pension will also double its real estate allocation to 10 percent from five percent, with up to $2.2 billion extra capital available for investments. There is currently no allocation to infrastructure but the fund would continue to “consider the class along with a host of other investments”, Greenberg said. The strategist said the increases would take place as soon as possible, but stressed investments would be made on a “prudent” basis. He said: “We hope to achieve these increases the sooner the better but they will be done when it's prudent.” “When we make asset allocations our decisions are based on the long-term outlook,” he added.