Ripplewood, MidOcean to raise joint fund

The two buyout firms have announced plans to collaborate on deals and create a global private equity entity operating in North America, Europe and Asia.

Ripplewood Holdings and MidOcean Partners today announced plans to 'collaborate on new private equity investments' in the US and Europe.

The two firms also announced plans to raise a joint fund 'under the Ripplewood Holdings' umbrella,' according to the release.

Ripplewood and MidOcean will 'continue to operate independently.'

Ripplewood, led by Timothy Collins, is based in New York and has offices in Tokyo. MidOcean, led by Ted Virtue, has offices in New York and London.

In statements, Collins and Virtue spoke of knowing each other for more than a decade. 'No two private equity firms share more silimar business strategies,' Virtue said in the statement.

Collins noted that his firm, a veteran US and Asian investor, was increasingly active in Europe.

The two firms are no strangers to making big headlines.

Ripplewood recently caused a sensation when it dawned on the market just how successful its March 2000 investment in Shinsei, the Japanese bank, would turn out to be. When Shinsei floated on the Tokyo Stock Exchange in February, the private equity firm’s retained stake in the bank was worth significantly over $6 billion (€5.07 billion).

MidOcean’s claim to fame, in addition to a string of successful realisations recently, is to have bought itself out of Deutsche Bank in a €1.5 billion management buyout backed by a cast of leading institutional investors in private equity. Completed in February 2003, the deal remains the largest spinout of a private equity division from a captive parent ever completed.

Now that the two groups have announced plans to merge their operations, more media attention is a certainty. Partnership tie-ups of this kind are extremely rare in private equity, an industry where the prospect of M&A driven consolidation has long been speculated about, but has so far not materialised.

According to a report in today’s Financial Times Ripplewood and MidOcean have advised investors in their funds that a merger has been agreed. Terms and conditions governing the two groups’ existing funds would not be affected by the deal, the paper said.

Virtue, who led MidOcean’s buyout from Deutsche Bank alongside his London-based colleague Graham Clempson, told the Financial Times: “This is a fantastic opportunity. We hope to outperform all other peers in private equity.”

Ripplewood, founded by Collins in 1995 and headquartered in New York, is one of the most influential private equity groups operating in Asia. Among the private equity funds it manages is RHJ Industrial Partners, a $1.2 billion buyout fund raised in 1999 which exclusively invests in Japan.

MidOcean, which prior to the spinout operated as the direct investment arm of DB Capital Partners, has offices in New York and London. The group counts Ontario Teachers’ Merchant Bank (Ontario Teachers’ Pension Plan), CPP Investment Board, HarbourVest Partners, Paul Capital Partners, Bregal, Coller Capital, Northwestern Mutual, The Yucaipa Companies and Presidential Life among its investors.