TAKING THE REINS

With her appointment as chairman of DLJ Merchant Banking, Nicole Arnaboldi now reigns as the senior most female investment professional in US private equity.

“I don't think that there's a parallel,” says Arnaboldi, who praises DLJ parent company Credit Suisse for both acting as a meritocracy and for emphasising diversity in the workplace.

The longtime DLJ veteran is joined by only a handful of female colleagues at the helm of major private equity firms. Only perhaps Dominique Senequier, chief executive of Paris-based AXA Private Equity, can compare in terms of the size and reputation of the firm under her control.

Arnaboldi has stepped into the position vacated by longtime chairman Steven Rattner after an online smear campaign was unleashed against him by the disgruntled exhusband of his former mistress. She will also maintain her previous role as co-head of illiquid alternatives, a position which put her at the head of DLJ's private equity, real estate and credit businesses as well as some hedge funds in the credit and real estate spaces.

“One of the things that Steve did in his tenure is really include all the partners in all the decisions,” said Arnaboldi. “That makes the natural evolution of people moving on very easy to accommodate and I think investors have been very supportive of that transition.”

Her additional title means that she will be spending more time with the investment team of DLJ Merchant Banking Partners, which she calls the firm's “flagship private equity buyout fund”. The unit closed its fourth fund on $2.1 billion in 2006, and as of 30 June managed roughly $7.4 billion in assets. Co-chairman of the group's investment committee since 2005, Arnaboldi says she is well-versed on the group's activities.

The fact that Rattner was not tied to a key man clause and Arnaboldi's longtime involvement with the buyout funds has allowed her to seamlessly slip into the new role, she says.

Arnaboldi has been with DLJ for more than 20 years. She joined the firmas an associate in 1985 and joined the private equity group in 1993. She then became an employee of Credit Suisse in 2000 when the global investment bank absorbed DLJ in an $11.5 billion acquisition, retaining the DLJ brand for its private equity operations.

As other firms struggle with distressed portfolio companies and rocky credit markets, Arnaboldi seems to be more than pleased with DLJ's positioning.

She touts the success of sticking to a consistent strategy of diverse, midmarket investments in the US and Western Europe. However it is the firm's defensive orientation, which must have provoked some quizzical head scratching in the heyday of the buyout boom, that is now paying dividends.

“We have anticipated for quite a while that there'd be a downturn in the US and I think that conservative positioning both in the industries we've been focusing on and in the capital structures we have differentiates us from some people who might have been more aggressive,” said Arnaboldi.

DLJ chose to decline much of the big leverage being offered in favor of flexible covenants and focussed on “defensive” industries like energy and healthcare.

The firm's ability to invest through troubled markets is also bolstered by Credit Suisse, which acts as a source of proprietary deal flow, capital markets access and industry expertise.

Now, as many tentatively guard dry power for a sunnier day, Arnaboldi is bullish.

Not limited to buyouts, DLJ is deploying mezzanine capital “more rapidly in 2008 than any year probably in the last decade” and is on the road raising capital for secondary private equity investing and a joint venture for cleantech.

“Historically, the best vintage years in private equity turn out to be the recession years,” Arnaboldi says. “I think we could be entering a very, very attractive period for investing.”

CARLYLE CHAIRMAN RELINQUISHES POST
Louis Gerstner, chairman of The Carlyle Group, has retired from the post he has held since 2003. A successor has not been named at press time. Gerstner initially made a one-year commitment to Carlyle but remained on for five before stepping down to fulfill other goals and interests, he said in a statement. Gerstner will remain with Carlyle as a senior advisor. In that capacity he will advise the firm's Asia, Europe, Japan and US buyout funds. Prior to joining Carlyle, Gerstner was chairman and chief executive of IBM from 1993 to 2002.

BC EXEC RELOCATES TO NEW YORK
London-based managing partner Raymond Svider of European buyout firm BC Partners is relocating to New York to head up the firm's US efforts. BC is in the process of enlarging its previously investor relations-focussed New York office into a site for deal origination and execution. James Rubin and Daniel Selmonosky, formerly founding partners of JPMorgan-backed rival firm One Equity Partners, joined BC's London office as senior partners in March and are currently based in New York as well.

CALTIUS ADDS TWO TO MEZZANINE GROUP
Caltius Capital Management has added two principals to its mezzanine unit to invest and manage the $500 million fund it closed last May. The Los Angeles-based mid-market specialist has added former Levine Leichtman Capital Partners (LLCP) director Todd Stemler and former CapitalSource director Gavin Bates to Cal t ius Mezzanine, which provides subordinated debt in the $5 million to $75 million range. At LLCP, St emler special is ed in providing investment products to consumer product, manufacturing, and service companies in the midmarket. At CapitalSource, Bates was responsible for sourcing and underwriting cash flow-based senior and subordinated debt transactions for equity sponsors.

BABCOCK & BROWN FOUNDER AND CEO RETIRE AMID TURMOIL
Babcock & Brown chairman Jim Babcock and chief executive Phil Green have resigned their respective executive positions at the Australian infrastructure specialist, as the firm responds to shareholder calls for a management shakeup. Babcock, who helped found the eponymous firm in San Francisco in 1977, will be replaced by current deputy chairman Elizabeth Nosworthy. Green resigned his post after 24 years with Babcock & Brown and nearly four years as managing director and chief executive. Green will be replaced in both capacities by current chief financial officer Michael Larkin.

RIVERSIDE TAPS TWO FOR EXPANDING HEALTHCARE FOCUS
Mid-market focussed private equity firm The Riverside Company has hired two long-time healthcare industry veterans to advise the firm as it devotes more attention to the burgeoning healthcare sector. Former Multi Plan president Harvey Sigelbaum and MB Healthcare Partners director Joseph Ibrahim have joined the firm's New York office as senior advisor and principal, respectively. Although Riverside will stay true to its roots as a generalist investor in small businesses valued under $150 million, the firm has taken an increasing interest in the healthcare sector.

EURONEXT IR CHIEF HEADS TO APOLLO
Apollo Global Management has snagged former NYSE Euronext investor relations chief Gary Stein to fill the newly created position of director of investor relations. At Apollo, Stein will be responsible for establishing and managing relationships with current and prospective investors, research analysts and the financial community at large. This is a step which signals the institutionalisation of Apollo's internal operations preceding the firm's initial public offering registered with the Securities and Exchange Commission.

FORMER REFCO PRESIDENT GETS 10-YEAR PRISON SENTENCE
Former Refco president Tone Grant has been sentenced to 10 years in prison for his part in the $2.4 billion defrauding of private equity firm Thomas H Lee Partners. Grant faced the possibility of life in prison after his conviction in Manhattan federal court in April on felony counts of securities fraud, wire fraud, bank fraud, money laundering and conspiracy. Boston-based TH Lee took Refco public in 2005 for $22 per share, nearly tripling the value of its initial investment. Later that year TH Lee discovered that a holding company owned in part by Grant owed Refco roughly $430 million in debt.