Brazos Looks to Ride A River of Equity Capital –

Former Hicks, Muse, Tate & Furst Inc. principal Jeff Fronterhouse this month joined forces with Evan Wyly and Lee Ainsle, co-managing partners of investment firm Maverick Capital, to launch Brazos Equity Fund, L.P.-a buyout fund that features a target of $100 million.

According to Mr. Fronterhouse, his decision to leave Hicks Muse to help form Brazos Investment Partners was based upon the opportunity to work with Maverick and its principals and also to focus more on middle-market transactions than his former firm now does. “This is not at all a commentary on Hicks Muse, but more a commentary on this opportunity,” Mr. Fronterhouse said. “Here is a chance for me to take a lead in an area that I think I can take a lead in.”

Brazos Investment Partners, named after a river in Central Texas, will look to acquire companies with annual revenue between $425 million and $200 million, and will attempt to add value to acquisitions by using a platform approach similar to the strategy employed by Hicks Muse. The firm will look to contribute $10 million to $20 million in equity per deal, but co-investment opportunities could allow Brazos to invest as much as $50 million in equity for some deals.

Starting with Deals in the Southwest

Although the firm has no set geographic focus, Mr. Fronterhouse said he believes Brazos initially will leverage the visibility of its principals in Texas and the Southwest to find deals. “We are focusing on companies with growth prospects, the majority of which will be control investments,” he said. “We will be creative in structuring transactions in order to work with family-owned businesses.”

The fund includes a cap of $150 million and standard terms. In addition, the principals will be contributing capital in excess of 5% of the fund’s total, although Mr. Fronterhouse declined to provide a specific amount. The fund will target commitments from individuals and institutions.

Thomas Hicks, chairman and chief executive of Hicks Muse, in a statement said he appreciated Mr. Fronterhouse’s work while at Hicks Muse and understood his desire to branch out from the firm.

Mr. Fronterhouse’s departure follows that of Hicks Muse Managing Director Alan Menkes (BUYOUTS Oct. 12, 1998, p. 3) to co-head the private equity group at Thomas Weisel Partners (BUYOUTS Feb. 8, p. 3).

Mr. Fronterhouse has worked at Hicks Muse for the past eight years. Prior to joining the firm, he worked at First Boston Corp., specializing in mergers and acquisitions.

Maverick Capital is a Dallas-based hedge fund manager with more than $2.5 billion in assets.

Although Maverick deals exclusively in public securities, Mr. Fronterhouse said Brazos will look to leverage the group’s team of public analysts and support staff to target private acquisition candidates.

The firm is looking to recruit two additional partners and four associates to strengthen its team.