Random Ramblings: MidOcean/Ripplewood & More


One of my political pet peeves is when elected officials hold to untenable positions for the sake of appearing “consistent.” Ditto in business, when certain mergers go through even though each side already has become a bit wary of the other. 

So it’s refreshing to learn that MidOcean Partners and Ripplewood Holdings have canceled a proposed merger, after realizing that the pairing added little value to either side. The deal was first announced in April 2004, and seemed to make sense. MidOcean would gain entrée into the Asian markets via Ripplewood, and Ripplewood would gain better footing in Europe via MidOcean. Each firm would operate independently in the short-term, but collaborate on most European and North American (MidOcean’s fund, at the time, prohibited Asian investments). Once both firms began to run low on dry powder – expected to be 12-24 months – they would begin raising a joint fund under the Ripplewood banner. Tim Collins, senior managing director of Ripplewood, would share his title with MidOcean CEO Ted Virtue. 

But MidOcean and Ripplewood never were able to find deals that both sides liked. “We discovered that our foothold in Europe needed to come from our industry focus,” Collins explains. “Originating deals based on geography instead of industry was just kind of awkward.” 

The deal seemed to basically fall apart last year, when Ripplewood floated a public vehicle in Brussels (Collins says that another private fund is still possible). Then, MidOcean began raising its own third fund earlier this year with a $1 billion target. A first close on the MidOcean fund came earlier this month, and limited partners report that Ripplewood wasn’t even a talking point. 

“We still believe in the private fund model,” Virtue says. “It is still possible that we’ll collaborate on future deals if it is accretive to our investors.” He declined to discuss the current fundraising effort, citing regulatory restrictions. 

*** Political pet peeve number two is when a candidate is constantly referred to with “millionaire” as a prefix. It’s happening right now with most news reports on Ned Lamont, who alternatively could be described as an entrepreneur or telecom executive. To me, it’s always more important to know how someone got rich than that he is rich. Moreover, the notion that people can “buy” elections has been regularly refuted and completely ignores the many incumbant advantages (including cash). If Lamont wins, it won’t be because he had money. It might have gotten him into the rodeo, but he’s still required to ride the bull. 

Of course, perhaps I’m biased. Not only did I once work for a “millionaire” political candidate (also an entrepreneur and environmental activist), but I endorsed Lamont back in June. Remember, the only qualification for PE Week Wire endorsement is that a candidate has some relevance to this publication. For Lamont, that means: (A) His company is VC-backed; (2) His wife is a venture capitalist with Oak Investment Partners. 

*** Financial News Online is reporting that Warburg Pincus, Apollo Management and BC Partners may be prepping a rival bid for HCA (i.e. more than $33 billion). If it comes to pass, it will be interesting to see how high the Bain/KKR/Merrill consortium will go. 

*** Private Equity Insider reports that KKR has held a $12 billion first close on its latest fund, which is targeted at $15 billion (but could go to $16b, with GP commitments). An LP confirmed the info with me on Friday, and says that the close is inclusive of the co-investment cash raised recently on the European public markets. A large percentage of this fund already is earmarked for transactions like HCA. A KKR spokeswoman declined to comment. 

*** Goldman Sachs, Citigroup, etc. have been getting lots of press play for their growing private equity outfits. I wonder if all the attention has made JP Morgan regret its decision to spin off JPMorgan Partners. I hope not, since it was the correct move…