While many of their peers were on vacation, a number of private equity professionals spent the summer quietly plotting the launch of new buyout firms.
Among them are Altamont Capital Partners, led by Jesse Rogers, the co-founder of San Francisco-based Golden Gate Capital; and New York-based Centre Lane Partners, led in part by three professionals who recently left turnaround specialist Monomoy Capital Partners.
Another new firm, Chicago-based Geneva Glen Capital, was recently launched by Adam Schecter and Jeff Gonyo, former executives with the Chicago-based firms WHI Capital Partners and Wind Point Partners, respectively. Altogether, these three firms are expected to have more than $1 billion available to make acquisitions.
“I was at the point in my career where I wanted to be a founder of a firm and make my own mark in the industry,” said Gonyo, of Geneva Glen.
Gonyo is hardly the first to reach this point. The history of private equity is filled with examples of ambitious professionals spinning out of established firms, lured by the prospect of having more control over investment strategy, and keeping a larger share of profits on their deals.
The aftermath of a recession can be a particularly good time to launch a buyout shop. Startup firms don’t have struggling portfolio holdings to hold them back, while their early acquisitions can benefit from the economic recovery.
Generating deal flow is the easy part for new buyout firms. Investment banks and intermediaries are only too happy to try to ply another client with potential investment ideas.
The big challenge for new shops is finding backing. Their best hope is to find endowments, foundations, pension funds and other institutional investors with an appetite for the small, tightly defined transactions in which emerging managers tend to specialize.
Altamont Capital is seeking as much as $450 million for its debut fund. Rogers, who prior to co-founding Golden Gate Capital was the founder and worldwide head of Bain & Co.’s private equity group, has recruited two former principals from Golden Gate to join him, according to peHUB.com, an affiliated website of PE Week.
Rogers could not be reached for comment. Previously, he has focused on investments in consumer products, retail, financial services, media, and transportation.
Centre Lane is the new private equity arm of ZM Equity Partners, which manages $500 million. In August, Mayank Singh and Nathan Richey, who were vice presidents at Monomoy Capital, and David Kreilein, an operating partner at Monomoy Capital, left to help lead Centre Lane. Richey declined to comment.
The firm seeks to invest $3 million to $50 million in companies generating revenue between $20 million and $500 million, according to its marketing material. Kenneth Lau and Quinn Morgan, former executives at D.B. Zwirn & Co., founded ZM Equity in 2007.
Geneva Glen will get most of its capital from one investor, Wanxiang America Corp., an arrangement Schecter and Gonyo believe will relieve them from fund-raising pressure and allow them to focus on investing. The firm will invest as much as $40 million in companies with EBITDA between $3 million and $20 million in business and consumer services, consumer products and food, and niche manufacturing, among other sectors.