Posted on: August 03, 2011
Investment firms are being spun out of banks left and right, some to keep companies in compliance with the new requirements imposed on banks via Dodd-Frank. peHUB has been tracking some of the spin-outs seeking capital, and some others that have not yet needed to fundraise but might soon. While the fundraising market has been generous to some private equity firms, other PE shops could face difficulty bringing in capital without their big-brother LPs. Only time will tell which LBO pros can’t hang without their big backers; already, some spin-outs have proven themselves capable of standing alone.
CCMP Eyes SWF LPs
Ridgemont Spun from BofA, Seeks Investors
Wachovia Legacy PE Fund Pamlico Spun Out of WF, Rebranded
Cyprium Emerges Following Key Split
BAML Spins Out North Cove
The Inside Story: Go on, try and fit any more acronyms into a headline. CCMP, which is mostly through its vintage 2006 $3.4 billion predecessor fund, is expected to begin raising its third LBO fund in the next year, our sister pub Buyouts reported. However, CCMP will have to do so absent their affiliate JPMorgan, which means their executives will have to establish a relationship with sovereign wealth funds.
The Inside Story: Ridgemont Equity Partners, formerly BAML Capital Partners, got spun out of its only LP at a pretty good time: about two years after raising a $1.5 billion fund. When Ridgemont was spun out of Bank of America in 2010, Travis Hain, who founded the captive group in 1993, went along for the ride. In January, peHUB reported Ridgemont would spend part of this year looking to replace its lone LP with a broader group.
The Inside Story: Pamlico Capital was one of the earliest bulge-bracket bank PE firms to be spun out. It took its name after Wachovia, post-Wells Fargo deal, the merged banks—which, thanks to Wells Fargo, already had a long-standing relationship with Norwest Equity Partners—spun out Wachovia Capital Partners. Fortunately, for the PE firm, it counts other LPs like Lexington Partners, HarbourVest and Alpinvest among its base of investors—so they don’t have to worry about all their money going out the window at once. In an interview, execs from Pamlico said they weren’t yet ready to raise a third fund.
The Inside Story: Key Corp. probably wishes it could have hung onto its Key Principal Partners. Cyprium, which was spun from Key earlier this year, doesn’t really fit the profile of institutions that could fell “too big to fail” institutions, since it generally makes minority investments using subordinated debt or equity. Cyprium isn’t quite done with its 2007 vintage, raised as KPP Investors III, but peHUB has it on good authority the Ohio-based investor will be back out fundraising next year.
The Inside Story: After breaking things off with its legacy BofA PE shop, BAML waited about a year to cut loose Merrill Lynch’s LBO team—again, in an attempt to simultaneously go core and comply with the Volcker Rule. Earlier this summer, North Cove Partners, formerly known as Merrill Lynch Global Private Equity, was spun out of BAML, and the $6 billion in assets it’s running will be managed in New York by Chris Birosak, Brian Gorczynski and Angel Morales, part of the PE firm’s investment team back when it was run under Merrill’s roof.
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Tags: AlpInvest, CCMP Capital Advisors, Cyprium Investment Partners, Harbourvest, Key Principal Partners, North Cove Partners, Pamlico Capital, Ridgemont Equity Partners
