Erin Griffith
Note: A previous version of this story incorrectly noted the firm had lowered its fundraising target, which remains at its original level. Dominus Capital, the New York firm comprised of former Quad-C professionals, is in the process of holding a first close on its debut fund, according to two sources familiar with the situation. The firm, launched in February of last year, will finalize its first close in the coming weeks. Meanwhile, it hopes to hold a second close on $300 million later this quarter. This is nearing the fund’s $375 million target and $500 million hard cap. For a first-time fund that went to market in July, the close is relatively impressive. Probitas Partners, the firm’s placement agent, declined to comment. Dominus was founded by Gary Binning, alongside Robert D. Haswell and Ashish B. Rughwani of Quad-C. Dan reported that the three had claimed they left the firm to “pursue separate interests” yet in a matter of months, reunited under the Dominus name.
Latest Example: Riverwood Capital, which last October began raising its debut fund with a $1.25 billion target. Pretty ambitious for a first-timer in today’s market. Or maybe a bit too ambitious. The Palo Alto-based firm, which makes growth equity tech investments, is now telling prospective LPs that $750 million is probably a more realistic fund size, according to a source. Notably, Riverwood Capital wasn’t always Riverwood. The firm formed last year under the name “Bigwood Capital,” with co-founders Michael Marks, the former KKR partner and Flextronics CEO, and Christopher Varelas, the former co-global head of tech media and telecom investment banking for Citigroup. No word on the reason behind the name change.
Arlington Capital Partners officially launched fundraising on its third buyout fund yesterday, according to a source. As peHUB reported in September, the fund has a $750 million target. Credit Suisse is the firm's placement agent, which is notable since Arlington had used UBS for its prior funds, raising $452 million for its debut and $585 million for the follow-up. Part of that was because of the
Propagandists: How China's '50 Cent Army' Could Wreck Web 2.0. That is not a reference to the 50 of ‘In da Club' fame. (Datamation) Heidi Asks: Isn't is about time for SWFs to express anger over the horrific performances of their Wall Street investments? ( Deal Journal) Whopper Sacrifice: The latest in a slew of attention-grabbing ad campaigns, Burger King will give you a free Whopper if you "un-friend" 10 of your Facebook friends. Example: "Caroline sacrificed Josh Lowensohn for a free Whopper." (The Social) In Related, But Still Off-Topic News: Price & Prejudice translated to Facebook. (Austenbook) No Surprise: About as ugly as expected: Retail sales fell 2.2% during the holiday season. (Dealbook)
Harvard, Columbia and University of Virginia don’t get to have all the fun. There’s another type of secondary sellers: Feeder funds. Plenty of the bulge bracket investment banks manage private equity funds-of-funds for their wealthy client investors, and those clients want out of their commitments. JP Morgan is one name rumored to be shopping a number of interests in private equity feeder funds. Lehman Brothers Neuberger Berman, is another. Lehman’s fund management business and its wealth management businesses are actually owned by different entities now—Neuberger manages the feeder funds, but Barclays has the wealth management operation.
After the interest in our post about Cogent Partners’ secondaries pricing report, I spoke with one of its authors, Cogent managing director Colin McGrady, about some trends he’s seeing in the market. What’s the biggest concern for secondary sellers right now? Institutional investors are really concerned that once the buyout funds start to believe the environment is good to make investments, those capital calls will come fast and furious. It won’t be a normalized capital calls pace. There will be nothing in terms of liquidity, and they’ll have a big wall of capital calls that come. So, naturally, that’s affecting saturation on the secondary market. As people budget for the next fiscal year, nobody is expecting any liquidity. They’re looking at uncalled capital and saying, “We could have a serious problem here.” The easiest way to solve that is the secondary market. But for immature interests in mega-caps, there is no market for those. The big buyers in the secondary market say, “We got our fill of those in ’07 when they were raising them. (The mega-buyout funds) didn’t turn away any capital.”
Had to Happen Sometime: Apollo is getting burned on the distressed Lyondell Chemical Co. debt it purchased. (The Deal) Porn Adult Entertainment Industry Bailout: Yes, thank you Fox Business News for covering this big story. "Girls Gone Wild" CEO Joe Francis and "Hustler" magazine publisher Larry Flynt have said they will petition Congress for financial aid along the lines of what the Big Three auto makers are getting." (Fox Business) FYI: The Ascent of Money, a Niall Ferguson documentary and book about the financial crisis, is airing on PBS Jan. 13. (Very Short List) With Dignity, I Guess: How Satyam's Chairman announced his massive fraud. (Clusterstock) Don't Count On Exits: The IPO Chill may last through 2010. (Deabook)
Tomorrow is January 8, and for many GE Capital employees, that means D-Day. peHUB reported in December that the GE Capital and its mid-market lending subsidiary, GE Antares, had suspended a planned round of planned layoffs until January 8, in order to implement a new, lower severance package plan. We haven't been able to confirm specifics, but rumors are that the severance package may be less than two weeks salary for each year of service. Perhaps the pitiful severance package isn't surprising, given the pressure on financial firms to curb executive pay. But since GE has not recieved any TARP money yet, that's hardly a valid excuse.
Seemingly out of nowhere, Sun Capital is laying off 10% of its workforce. The turnaround buyout firm—which I was just writing about as having a strong position going into the new year—is cutting 23 from its 200-person staff, a spokesperson confirmed. This is confusing to me since the firm only last year raised its largest ever fund, oversubscribed by $2 billion. Meanwhile, it is in the midst of prime feeding season for turnaround firms like itself. Sun’s biggest selling point is its massive staff of seasoned turnaround operating experts. Did the firm get ahead of itself in its 2008 ramp-up?
It's a familiar story line these days: Once the masters of their domains, private equity pros have faded from power and prestige with the onset of the credit crunch. Et cetera, et cetera. Yesterday's news provided further proof of this narrative. Macrovision rejected One Equity Partners, the firm it had lined up to buy TV Guide Network, in lieu of a strategic buyer. The price, $255 million, was only a slight bump from One Equity's $225 million. The biggest difference of course, is those pesky contingencies. Unlike One Equity, strategic suitor Lionsgate would pay it all in cash. Private equity has been abandoned at the alter, and frankly, it's a bummer. I can't say I'm surprised with the number of things that can do wrong in the deal-closing process these days. The flood of stories claiming