Pritzker Private Capital: ‘We’re in no hurry to make investments’

The firm's president Paul Carbone talks about the committed capital pool with other family offices, and what sort of companies they invest in.

Pritzker Private Capital (PPC), which invests on behalf of the Pritzkers and other families, separated from Pritzker Group Private Capital in February last year. Led by chairman and chief executive officer Tony Pritzker and president and managing partner Paul Carbone, PPC raised a committed capital pool of $1.8 billion in 2018 and recently closed its fourth acquisition from that pool. It invests in North American mid-market companies, focusing on three industry verticals: manufacturing, services and healthcare.

Carbone spoke to Private Equity International on PPC’s journey so far.

What has surprised you this year?

The pricing in the markets – I just didn’t think we would be here. Valuations continue to be very high and we didn’t foresee this when we were thinking about 2019, because everyone was talking about the economy and potential slowdown.

That said, we are in no hurry to make investments. This year, we acquired Valicor and intend to make another one or two [investments], but even if we don’t, we are not concerned.

Why did PPC separate from the Pritzker Group last year?

The brothers JB and Tony Pritzker set up Pritzker Group Private Capital to invest in mid-market companies in 2002. Over the years, we acquired several companies and grew the team to 40 investment and operations professionals. The decision to separate PPC was driven by several considerations. For one, while we were building great companies and writing meaningful cheques to those companies, our money was staying in the ground longer. We didn’t think it was prudent from a risk and diversification view to continue with that strategy, even if the Pritzker brothers are enormously wealthy.

At the same time, we had other family offices that wanted to partner with us. For one deal that required substantial investment, we invited capital from other families, but the process proved to be very cumbersome, and we realised we needed to move with more certainty and speed. We decided to form a club with other select families and raise a committed capital pool for co-investments. The Pritzkers are the largest investors in the pool, and we retain complete discretion over the investments.

What changed at PPC after the separation?

Everything remained the same: the same team, the same ideology and approach of investing in and growing our companies. We are still investing in family-, entrepreneur- or management-owned mid-market businesses that care about their business post-close and care about their legacy and employees.

We often say we are the third option versus private equity firms and strategic investors. We are a family pedigreed firm with longer duration capital and are very cognisant of legacy, an issue that is close to the kind of companies we want to partner with.

Up until now we took majority positions in the companies we acquired. Now we have expanded our investment criteria to take substantial minority positions as well. This came [about] because we have been in discussions with family businesses that are looking for capital and partners but are unsure about what they want. Do they want to sell minority or majority positions? How do they want to structure partnerships? Expanding our criteria allows us to initiate legitimate dialogue on their needs and how we can help execute their strategies.

Interested in hearing direct remarks from Paul Carbone? Join us at this year’s Operating Partners Forum: New York 2019 where Paul will sit down for a keynote interview to discuss the increasing asset value and managing risk in long term investments. Click HERE to learn more