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Jerome Greene, pioneer of private equity capital raising, dies

  • Greene formed Merrill Lynch PE fundraising group
  • Hired many top names in industry today
  • Considered ‘pioneer’ in PE fundraising

Robert Johnston, founder and CEO of Beacon Hill Financial, remembers the meeting when he told Jerome Greene about his new business of raising capital for buyout funds.

Johnston, one of the pioneers of the private equity placement industry, said he met Greene at a New York City hotel in the early 1980s and told him about the alternative investments that pensions, endowments and foundations were exploring.

At that time, Johnston had just signed up a firm called Forstmann Little & Co to raise a debt and equity fund, and that success caught Greene’s attention.

“Jerry gave me a call and asked, ‘can you tell me what you’re doing?’” Johnston said, adding with a laugh: “I probably shouldn’t have told him.”

Greene took the idea and created what for a long time was the only bank-run PE-capital-raising group in the market. His team at Merrill Lynch helped seed what today is a thriving, lucrative industry. Many of the people who worked on Greene’s team went on to form their own teams or take high-profile private equity roles at firms.

The group also helped some of the biggest names in private equity raise early capital, including Leonard Green, TPG, Thomas Lee, Freeman Spogli and Charterhouse.

Greene died April 27 after a battle with cancer. He was 75.

“Merrill was clearly the first investment banking firm in the fundraising space and the godfather of placement team spinouts,” said Loren Boston, senior managing director at placement shop MVision, who worked with Greene at Merrill. Greene “was truly a great man in our industry. … He was truly a pioneer,” Boston said.

“He was a pioneer of raising private equity capital on the Street. … He spotted an opportunity and went after it,” said Phil Pool, a veteran PE fundraiser whom Greene hired at Merrill Lynch in the 1980s. Pool is co-founder and chairman of iCapital Network.

“He completely invented the business in the ’80s at Merrill Lynch” said Dale Meyer, managing partner at Revelstoke Capital Partners, who worked with Greene at Merrill. Greene “institutionalized the fundraising process. Without him it might still be all friends and family investing in private equity. [He] put a lot of famous buyout and venture guys in business.”

Starting out

Greene joined Merrill Lynch in 1980 and left in 1990, joining boutique placement shop Benedetto, Gartland & Greene. He left in 1997 and formed his own capital-raising business, JP Greene & Associates. Greene worked at Salomon Brothers from 1972 to 1980, where he ran the firm’s private-placement group, raising mezzanine debt from insurance companies for deals.

At Merrill Lynch, Greene had the idea that he could help buyout funds raise capital from the same insurers where he raised private debt, sources said. The idea was, “why don’t we help you and find some insurance companies you don’t know,” said Kevin Albert, a partner at Pantheon who worked with Greene at Merrill Lynch.

Insurance companies were happy to invest equity into buyout funds to get a piece of the firm’s debt business when they did deals, Albert said. At that time, before high-yield funds exploded in popularity, buyout shops used bank loans and mezzanine capital from insurance companies for deals.

Around this time, too, public pensions started committing to private equity funds, greatly expanding the universe of investors for them.

“There wasn’t an organized business plan to get into the placement-agent business, but there was some early success helping people like Tom Lee raise money,” he recalled. “More people kept coming to us; there was no one else in the world doing this, no big boutiques, none of the other [banks] had a placement-agent group.” Some smaller boutique fundraisers were around at that time, including Johnston and Charles Eaton, who formed Eaton Partners.

Two roles

One of the things Greene did was figure out what kind of people he needed to be placement agents. There were two roles: originators or project managers who prepared paperwork and performed due diligence, a role for banker types; and selling funds to institutional investors, a role for salespeople.

“Once pensions got involved, there were too many relationships for the banker types to manage, so we would bring in full-time dedicated institutional sales folks,” Albert said. “Those folks would work to develop relationships with pension funds. … That ended up being a pretty common format.”

Salespeople had to understand how to build longer-term relationships, which took a certain type of personality, Boston said. “The challenge was really in pioneering a new product. … You were basically finding the right investors and educating them on the concept of investing in funds.”

On the GP side, “we helped them with structuring and documents, educated them on what investors needed to know, and taught them how to present themselves to the market,” he said.

Greene is survived by his wife of 24 years, Susanne McAlister. He is also survived by two children, Dawn Greene, of Manchester, Massachusetts, and Jerome Greene Jr of Indianapolis.

Greene graduated from Boston College and served in the United States Navy as a communications officer. He earned an MBA from the University of Massachusetts, Amherst, and started his career as an alternative-investments analyst at Phoenix Mutual Life Insurance Co in Hartford, Connecticut, according to his obituary.

Outside of work, Greene was a photographer, long-distance runner and sailor.

Action Item: Read Greene’s obit here: www.legacy.com/obituaries/indystar/obituary.aspx?pid=185236587

Photo of Jerome Greene courtesy of LinkedIn