LP Rankings >p.42 THE NEWSLETTER SERVING INVESTORS AND MANAGERS OF ALTERNATIVE ASSETS » AUGUST 2003 | VOLUME XIII | ISSUE 8 Inside Limited Partners See Growing » Banks to sell portfolios > p.4 Promise In Backing New Groups » Dutch family makes splash > p.4 » Ohio seeks advisor > p.6 More than $6 billion available for young managers » First client for Franklin Park > p.8 » Two VCs propose new fund > p.10 hen it comes to private equity, California State Teachers’ Retirement System has always had a W preference for high Roman numerals. PUBLIC PRIVATE-DEAL But over the next five years, the $92 billion pension fund plans to commit $100 million to Fund Is and IIs. Wealthy Investor “The industry is changing,” says Senior Tries to Pressure Investment Officer Select Debut Funds Réal Desrochers, sen- Closed in 2003 VC Through Press ior investment officer imited partners have never Fund Name Amt. Raised at CalSTRS, which Location ($M) L been ones to talk to the press plans to hire an about problems they’re having Antares Special Opportunities $100 with a fund manager (believe me). advisor to run its new- Fund, L.P. Chicago Years after the fact, a limited manager program. Arsenal Capital Partners, L.P. $300 partner might whisper in confi- “Firms are re-group- New York dence about a partner who spent ing, and some people Quaker Bioventures, L.P. $170 more time on the golf course than will want to run their Philadelphia in the office. own show.” But many LPs feel that it’s Shoreview Capital Partners, L.P. $300 A growing num- Minneapolis shooting themselves in the bank ber of institutional account to talk publicly about Sterling Capital Partners, L.P. $300 investors agree that Baltimore such incidents while fresh. So the industry has many firms have their pick of ent-ered a period SunTx Capital Partners, L.P. $125 backers that investors may fear getting labeled a trouble-maker incubation—like one whose money isn’t worth taking. of those giant dust They also may worry about swirls, light years away, out of which stars are being injuring the firm’s reputation with formed. And they’re willing to put money behind the most management teams. promising. Raul Fernandez knows the Together, CalSTRS, Massachusetts Pensions Reserves drawbacks. But the rich entrepre- Investment Trust, University of Texas Investment neur is nevertheless eager to get Management Co., WestAM Private Equity Group and other institutional investors have allocated more than $6 bil- > continued on p.40 > continued on p.35 www.PrivateEquityAnalyst.com AUGUST 2003 | VOLUME XIII | ISSUE 8 News Deal Trends Deutsche bank to sell fund porfolio; Citizens hires advisor Distressed deals come into vogue in second quarter 24 to explore sale 4 The Private Equity Deal Log Dutch family creates splash in United States 4 Apollo joins Soros in bid for international satellite company Ohio seeks advisor to run $100M fund of funds 6 26 Deal’s glow fades for Fenway, McCown, De Leeuw, key LP 6 American Securities buys several power plants in northern Franklin Park wins city of Philadelphia as first client 8 Indiana 26 Two venture capitalists float idea for tech fund 10 Fenway finds manufacturer of professional football helmets a good fit 26 New York assigns advisory, consulting work 12 Nautic puts $90 million into janatorial services company 27 Buyout firms begin guiding directory publishers to IPOs 12 Providence invests $75M in chain of Chicago movie theaters UBS adds bulk to its U.S. fund placement division 14 27 Monument, Helix team up to offer fund marketing 14 Sterling acquires two companies that transport petroleum by land 27 Limited Partner Profile Carousel, Halifax reach agreement to buy Meineke Car Care Standard Life plots return to United States 16 Centers 28 People Profile Andritz exit may put Carlyle on a roll with European fund 28 Wanted: secondary interests in young LBO funds 18 The Fund Raisers Roundup 29 Partnership Profile League Table: Large LPs by Allocation Dot-Com exits help boost TCV’s performance 20 to Alternative Investments 42 Deal of the Month Does Carlyle deal show it needs another €2 billion? 22 Find out what’s next Discover the best investment, acquisition, and corporate partnership opportunities on the East Coast at the Ernst & Young / VentureOne Innovation & Growth Exchange Conference, September 30 & October 1 in Boston. > Register online and view the agenda at www.InnovationGrowthExchange.com, or call 781/304-1500 > Early registration discounts available until August 26! Ernst & Young | www.ey.com VentureOne » A Division of Alternative Investor | www.VentureOne.com THE Private Equity Analyst NEWS Ms. Long declined to elaborate, Deutsche Bank To Sell Fund Portfolio; but sources close to the matter said that the bank is looking to pare Citizens Hires Advisor to Explore Sale down lines of business it doesn’t consider core to its operations. The econdary buyers are eager Deutsche Bank acquired the to- bank’s private equity arm, Citizens to start churning out cash- be-auctioned portfolio as part of its Capital Inc., continues to make S flow projections on fund purchase of Bankers Trust Corp. in direct investments. portfolios likely to be sold by two 1999, according to a source. Largely According to our database, banks. for strategic reasons, Bankers Trust Citizens Financial Group has com- Deutsche Bank AG, Frankfurt, had committed roughly $3 billion to mitted to funds managed by Spec- plans to sell a $600 million to $700 partnerships from 1995 to 1999, trum Equity Investors, Menlo million portfolio of partnership including ones managed by Bain Park; Whitney & Co., Stamford, interests, mainly in LBO funds. Capital, Boston, and Kohlberg, Conn., and Boston-based firms Citizens Financial Group, Kravis Roberts & Co., New York. Boston Ventures Management Boston, meantime, is contemplating Deutsche Bank is believed to be Inc., and Weston Presidio Capital, the sale of a roughly $250 million selling just a portion of the portfolio, among others. portfolio of venture capital, buyout but we weren’t able to learn which Reach Deutsche Bank at (212) and mezzanine funds. Cogent funds, or how many would be 326-6402; reach Ms. Long at (617) Partners, Dallas, has been hired to included in the sale. Deutsche Bank 725-5635. help value the portfolio, and find executives declined to comment. potential buyers. Deutsche Bank decided in late 2001 to reduce its exposure to both Dutch Family Creates its direct and indirect private equity Splash in United States Limited Partners With portfolios. The goal has been to Portfolios To Sell reduce volatility in its earnings state- The Brenninkmeijer family, one of ments, and to lower its cash reserve the wealthiest in Holland, plans to Abbey National PLC London requirements. invest some $2 billion in private Description of Portfolio Partial sale Earlier this year, the bank sold a equity, both directly and through of £1.8 billion ($2.8 billion) portfolio of funds, over the next few years, said limited partnership commitments. nearly $1.5 billion portfolio of direct Status Reportedly close to finding investments to a consortium of sources familiar with the effort. a buyer. investors led by Ted Virtue, who led Bregal Holdings, a private equity division of the family’s Swiss Dresdner Bank Munich the team at Deutsche Bank that had (Now owned by Allianz AG) built the portfolio (The Private Equity holding company, is recruiting part- Description of Portfolio $4 billion Analyst, March, 2003). More recently, ners to invest around $600 million to in direct investments and limited the bank has said it plans to securitize $700 million directly in U.S. mid- partnership interests. a separate portfolio of some 65 limit- market companies, according to one Status Unknown. ed partnership interests. The bank European source. FleetBoston Financial Corp. plans to raise $330 million in cash by The division also expects to hire Boston secure the interests, creating a basket a manager to build an estimated Description of Portfolio Partial $600 million to $700 million sale of roughly $3.6 billion portfolio of debt securities whose value is of direct investments and limited based on and secured by the under- portfolio of U.S. and European pri- partnership commitments. lying portfolio. vate equity funds, our source said. Status Unknown. Citizens Financial Group is con- In May, Bregal Holdings put UBS AG Zurich sidering the sale of a 35-fund port- London-based Englefield Capital Description of Portfolio Partial folio backed between 1997 and 2001. on the map by committing around sale of $2.3 billion portfolio of “Our strategic direction has changed,” €650 million ($732 million) of the limited partnership commitments. said President Gail Long. “But we are €700 million that the firm raised for Status Reportedly close to finding a debut European mid-market buy- a buyer. in no urgency to sell…we will sell only if the price is right.” out fund, one source said. Source: The Private Equity Analyst August 2003 4 THE Private Equity Analyst NEWS Earlier this year, the division portfolio of venture capital, buyout staff. The pension fund employs joined AXA Private Equity, CPP and other private equity funds. three professionals to build a Investment Board, and the handful Assistant Investment Officer Greg roughly $2 billion portfolio over the of other investors that backed Uebele said that the advisor would next five or six years. MidOcean Partners, when that firm commit about 55 percent of the Ohio PERS began adding to bought a private equity portfolio money to buyout funds, 25 percent its private equity portfolio only from Deutsche Bank AG, Frankfurt. to venture capital funds and the recently: Until 1997, it was prohibit- Yves de Balmann, co-chairman remaining 20 percent to distressed ed by law from backing GPs that of Bregal Holdings, and formerly debt funds, mezzanine funds and invest outside the state.