Wilbur Ross to divest portfolio of stakes

The turnaround investor joins a list of wealthy businesspeople in Trump’s cabinet who must now divest millions in private markets holdings to avoid potential conflicts of interest.

Wilbur Ross may take as much as 240 days – almost three times the standard 90-day timeframe – to sell certain private markets holdings because they are illiquid, following his swearing in as US Secretary of Commerce on Tuesday.

The billionaire businessman and founder of private equity firm WL Ross & Co. is expected to divest stakes in at least 11 limited partnerships and 25 WL Ross & Co.-related entities, as well as other holdings, according to a letter submitted to the Department of Commerce's designated ethics official on 15 January.

In the letter, Ross notes he extended the timeframe to 180 days from 90 days for some of his illiquid assets because it may take longer to divest them.

“I am, however, committed to divesting all of these assets as promptly as is reasonably practicable, and I may not need the entire 180-day period to complete all divestitures,” Ross notes.

The letter also states the ethics official has advised Ross he may have a further 60-day extension to divest a subset of his assets, provided he demonstrates that he has made “substantial progress toward completing the divestiture of all of these assets by the end of the 180-day time period.”

Ross had also stated that following his confirmation he would resign from positions including with seven entities related to Invesco, the investment management firm that acquired WL Ross in 2006. He is still listed as chairman and chief executive of WL Ross and Invesco Private Capital on Invesco's website.

The investor joins a list of wealthy individuals in President Trump's cabinet who have said they will divest certain financial holdings upon confirmation of their appointment to avoid potential conflicts of interest. Betsy DeVos, the businesswoman and daughter-in-law of one of Amway's co-founders who was confirmed as education secretary in February, signalled she would divest stakes in entities including private equity, real estate, private debt and collateralised loan obligation vehicles, as sister publication Secondaries Investor reported. The value of DeVos' private funds stakes are worth at least $180 million, according to PEI estimates.

On Monday, Ross was confirmed in a 72-27 vote in Washington by the US senate and became the first private equity professional to join the Trump administration.

According to the letter and a separate disclosure report uploaded to the US Office of Government Ethics website detailing some of the turnaround investor's holdings, Ross will divest his interests in at least 80 entities, at least a third of which appear to be WL Ross-related vehicles such as WL Ross GP, WLR China Energy Associates, WLR Euro Wagon Management and five Cayman Islands-registered entities.

These 80 entities have a value of at least around $59 million, according to PEI estimates, although the values are given as ranges for some entities, and are not given for others.

Limited partnerships Ross will divest stakes in include:

  • 8 Partners VC Fund I
  • 8VC Angel Fund I
  • Euro Wagon
  • Euro Wagon II
  • Formation8 Partners Entrepreneur Fund II
  • Formation8 Partners Fund I
  • Ross Expansion FLP
  • WL Ross Group
  • WLR Master Co-Investment SLP Associates
  • WLR Select Associates DSS
  • YG Partners Fund

Ross is also expected to divest all financial interests in Invesco – the investment manager that bought WL Ross in 2006 – within 90 days of his confirmation, with the exception of nine vehicles related to real estate financing, mortgage lending and transoceanic shipping. Six of these entities, all of which bear “WLR” in their titles, are no longer acquiring new assets. The remaining three are fully invested and Ross's holdings in these are “solely as a passive investor.”

The letter notes that the Department of Commerce's senior ethics official has advised Ross that it is not necessary to divest the nine entities if the likelihood of his participation in the activities of these entities is “remote”.

Ross's disclosure also notes the investor holds stakes in Apple Inc. and Boeing Co., and that his art collection is worth more than $50 million.

Invesco did not return a request for comment.