Ex-Apollo exec draws $240 mln to invest in public and private companies

Ex-Apollo Global Management partner Scott Ross held a first close on his debut fund, which invests in public equities as well as privately held companies, according to people familiar with the New York firm, Hill Path Capital.

The fund will have a shorter duration than the typical 10-year private-equity fund. It’ll have flexibility to buy minority positions in public companies, and will target companies of as much as $2 billion in enterprise value.

Hill Path isn’t going to be an activist fund that launches proxy battles; rather it’ll work with existing management, mostly in lodging, leisure, consumer, entertainment and business-services companies.

The strategy of using a private-equity fund to invest in public stock hasn’t been widely used, according to market observers.

Kelly DePonte, of placement firm Probitas Partners, recalled two firms that invested in common equity: Blum Capital Partners and Relational Investors. Relational finished winding down last year after its co-founder, Ralph Whitworth, was stricken with cancer. Blum Capital held a first close of $261 million for Blum Strategic Equity V in August 2015, according to Bison.

Hill Path Capital disclosed $197 million raised from 25 investors in a Form D filing, but the firm’s total assets under management now tip the scales at $240 million, the people said. It’s still in fundraising mode, with no disclosed target for the pool.

The firm is up and running with a team that includes Ross as well as Lawrence Juliano, chief financial officer and chief compliance officer, who joined the firm from Northwood Investors.

Prior to departing as a partner at Apollo to launch his own firm, Ross worked on the $1.3 billion buyout of CEC Entertainment Inc, the parent of Chuck E. Cheese. The family dining and entertainment company made the deal with Apollo after wrapping up a strategic review.

He also worked on Apollo’s 2012 $703 million take-private deal for Great Wolf Resorts, as well as its attempt to buy amusement-park operator Cedar Fair in 2010 for $2.4 billion. He also took part in the buyout of Evertec Inc, a payment-processing company that generated a 5x return for Apollo, according to a report by Zacks. Prior to Apollo, Ross worked at Goldman Sachs.

The firm operated under a placeholder name of SIR Capital Partners before officially launching as Hill Path.  The firm listed a date of first sale of January 15 for its debut fund.

Action item: Hill Path Form D filing, http://1.usa.gov/1S6otxU

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