Americas – November 2003

Americas 2003-11-01 Staff Writer <strong>America<br> Monitor</strong><br> <sec level="2"><strong>Note to regulators: we're not hedge funds!</strong><br> <quotation><bold>Two recent regulatory moves in the US designed to rein in hedge funds have c


Note to regulators: we’re not hedge funds!
Two recent regulatory moves in the US designed to rein in hedge funds have caused jitters in the private equity market. David Snow reports.

Should the same rules that govern the distribution of hedge funds apply to private equity funds as well? As President Clinton might have said, “It depends what your definition of the term ‘private investment fund’ is.”

Two recent regulatory moves in the US designed to rein in hedge funds have caused jitters in the private equity market. In one case, a recent policy clarification from the body that governs US broker-dealers may change the way that private equity funds are marketed, at least temporarily.

The National Association of Securities Dealers, which sets policy for the investment banks and other firms required to register as broker-dealers, was recently asked to clarify its position on the use of what is called “related performance” in marketing materials. Related performance means the performance of a fund-management group for a prior or separate fund. The clarification request, sent in by the Securities Industry Association, referred specifically to hedge funds.

Early last month, the NASD “clarified” its policy in a letter back to the SIA: in their marketing material, broker-dealers may not refer to the performance of any fund other than the one presently being marketed. Since these rules apply to mutual funds, the NASD reasoned, they should also apply to hedge funds.

Most broker-dealers in the business of marketing alternative investments, including placement agents, were caught off guard by this policy shift (although the NASD argued the clarification signaled not a change, but a confirmation of an existing rule). In response to questions from the private equity industry, the NASD privately communicated a further clarification: ‘yes, private equity, this means you too’.

Is this fair? Although private equity and hedge funds both use private partnership agreements and are governed by Regulation D, the section of US securities law governing the placement of unregistered securities, private equity funds are vastly different from hedge funds in terms of their respective investment strategies. Hedge funds typically trade liquid assets and as such allow investors to switch in and out of their partnerships with greater regularity. This means a hedge fund may trade for months or years before actually having to go out and raise additional capital. Private equity funds do not have this luxury.

The SEC went out of its way to distance private equity from its wilder hedge fund cousins.

They need all, or most of, the capital at their disposal before the deals can get done. There is no current performance to meaningfully highlight in marketing documents. The only numbers private equity firms have to point to are those from “related” funds.

The clarified NASD rules still allow placement agents to present related performance in a private placement memorandum of a private equity fund. A New York-based placement professional, who asked not to be quoted on the record, points out that, while he doesn’t yet fully understand the implications of the NASD policy, it is clear that “some adjustments will have to be made in the presentation materials,” including taking out performance data.

This placement agent doesn’t see this as a problem: the PPM is already the “governing document” in any marketing presentation. Already, he says, his presentations to investors typically involve repeated references to the PPM for greater detail, as in, “Now please refer to page 36 of the PPM to see those figures broken down.”

The NASD’s decision to lump private equity in with hedge funds comes shortly after a staff report from the Securities and Exchange Commission, which went out of its way to distance private equity from its wilder hedge fund cousins. The commission recommended that hedge funds be required to register as investment advisors. Private equity firms will not be required to do so. The SEC, in a section of its report called “Pooled investment vehicles that are not hedge funds,” devotes itself to defining private equity funds, venture capital funds and commodity pools and explains why these should not be confused with hedge funds.

Placement agents and their clients no doubt wish the NASD had read this section. Sources say the SIA is meeting to decide whether it should request further clarification from the NASD. In any event, the regulator of broker-dealers has said it is considering doing away with the related performance ban altogether. In the meantime, expect lawyers to be devoting many billable hours to the issue.

Deals & Exits

American Securities in $335m recycled energy deal
New York-based private equity firm American Securities Capital Partners acquired six operating subsidiaries of Primary Energy in a transaction valued at $335m. The transaction size includes cash and assumed debt.

Primary Energy consists of six facilities that generate 900 megawatts of electricity and thermal energy by recycling blast furnace gas and wasted heat from coke ovens and gas-driven power generation. The acquisition took place through holding company Private Power, which was founded to make acquisitions in this niche of the energy market. Private Power will now be renamed Primary Energy Holdings.

ASCP is currently investing its third party private equity investment fund and has more than $1bn under management. ASCP is also a co-owner of ICV Capital Partners, which focuses on minority-owned or inner-city companies.

Apollo buys GNC for $750m from distressed Dutch food group
New York-based private equity firm Apollo Management bought vitamin supplement company GNC from Dutch food group Numico for $750m. Additional terms for the deal were undisclosed. Following the completion of GNC’s sale, Numico will liquidate its US arm, Numico USA.

The sale of Pittsburgh-based GNC, well known for its chain of retail stores, is a move by the Dutch company to refocus its business on baby food and clinical nutrition, according to a statement. Numico originally bought GNC in 1999 for approximately $2.5bn.

GS Partners in $228m plastics acquisition
New York-based Goldman Sachs Capital Partners, through its portfolio company Berry Plastics, will buy Landis Plastics for $228m, including repayment of debt. Specific figures for the transaction, which is expected to close in the fourth quarter of 2003, were not revealed. The purchase will be funded with a combination of debt, an equity investment from Berry’s existing investors and cash from Berry.

Berry has also agreed to acquire four facilities currently leased by Landis from affiliates of Landis, and intends to assign its right to purchase these facilities to a third party and lease them from that third party.

Chicago Ridge, Illinois-based Landis makes plastic packaging for dairy and other food products. It generated approximately $212m in 2002 net sales, according to the statement. Evansville, Indiana-based Berry, which was sold to Goldman for $837.5m by First Atlantic Capital last year, manufactures injection-molded and thermoformed plastic opentop containers, aerosol caps, closures, drink cups, and housewares.

Blackstone, Providence recapitalize California media group for $2bn
New York-based private equity firm Blackstone Group and Providence, Rhode Island-based media and communication investment specialist Providence Equity Partners have teamed to acquire media conglomerate Freedom Communications. Terms of the deal were not disclosed. Freedom Communications has been valued at approximately $2bn.

Freedom Communications owns several media properties, including newspapers, television stations and online properties. The company’s flagship newspaper is the Orange County Register. The company owns a total of 65 daily and weekly newspapers with a daily subscription of 1.2m. The broadcast division owns five CBS affiliates and three ABC affiliates.

Blackstone will use capital from its $2.2bn Blackstone Communications Partners I fund and its $6.5bn Blackstone Capital Partners IV fund. Providence’s investment will be made through its Providence Equity Partners IV fund.

Vestar sells Michael Foods to Thomas H. Lee for $1.05bn
Boston-based private equity firm Thomas H. Lee Partners bought Michael Foods from private equity firms Vestar Capital Partners and Goldner Hawn Johnson & Morrison in a transaction valued at $1.05bn. Vestar and Goldner Hawn originally acquired Michael Foods in a 2000 privatization valued at $800m. The firms contributed $175m of equity to the transaction and there was a $200m high-yield debt issue underwritten by Banc of America Securities and Bear Stearns.

According to a source familiar with the situation, Vestar returned approximately two and a half to three times its invested capital on the exit. Vestar declined to comment on the results of the investment.

Michael Foods processes and distributes egg products, refrigerated grocery products and refrigerated potato products. Its brands include Better ‘N Eggs, All Whites, Diner’s Choice and Simply Potatoes. Michael Foods reported $1.1bn in sales in 2002 and employs approximately 4,000 people.

Kelso’s fashionable $167m exit from retail franchise
New York-based private equity firm Kelso & Co sold portfolio company Peebles, a retail franchise, to publicly held Stage Stores for $167m in cash. The deal is expected to close early next month. Under the terms of the transaction, Stage will also assume the outstanding balance under Peeble’s revolving credit facility, which totaled $46.9m at Oct 4 2003, and will acquire Peeble’s private label credit card portfolio, which had an aggregate balance of approximately $34m as of the same date. Shortly after the acquisition, Stage intends to sell Peebles’s credit card portfolio and use the proceeds to pay off debt.

South Hill, Virginia-based Peebles, which began as a single department store in 1891, has 136 stores in small and mid-size markets in 17 Mid-Atlantic, Southeastern and Midwestern states. For the year ending August 2 2003, the company reported sales of approximately $311m and net income of approximately $16.9m. The merger of Stage and Peebles, which operate in contiguous markets, will result in a company with approximately 520 stores in 27 states, and annual sales of approximately $1.2bn.

Houston-based Stage currently operates 373 stores in 13 states under the Stage, Bealls and Palais Royal brand names. For the 2003 fiscal year, the company expects to report sales between $974m and $991m, with net income between $51.3m and $56m. The projection is based on the expected closing of the Peebles acquisition in early November.

Leonard Green in $420m florist privatization
Los Angeles-based merchant banking firm Leonard Green & Partners signed an agreement to acquire florist giant FTD in a privatization worth approximately $420m. Leonard Green will pay $24.85 per share for the florist. Goldman Sachs acted as FTD’s adviser for the transaction.

FTD provides floral services worldwide through 20,000 FTD members in the US and Canada and other retail outlets. The company sells flowers and other gifts through these retailers, a toll free phone number and a website. The shares have steadily increased to around $25 since July 2002, when they traded for less than $15. The company has a market capitalization of $403m. The company’s chief executive officer, Robert Norton, will continue in his role.

Saunders Karp, Trimaran in $315m Norcraft deal
Stamford, Connecticut-based private equity firm Saunders Karp & Megrue teamed with New York-based Trimaran Capital Partners to buy kitchen and bath cabinet maker Norcraft from Chicago-based Pfingsten Partners and Chicago-based private equity firm Goense, Bounds & Partners in a deal valued at $315m.

Precise terms of the deal were not disclosed. Pfingsten acquired Norcraft in 1998 with Allstate Private Equity, the private equity division of insurance giant Allstate. Goense Bounds was founded in 1999 by the partners who ran Allstate Private Equity and the firm continues to manage investments made while at Allstate.

Norcraft, which is based in Eagan, Minnesota, makes kitchen and bathroom cabin products. The company’s brands include Mid Continent Cabinetry, UltraCraft, StarMark and Fieldstone. The products are marketed nationally through kitchen and bath cabinet dealers, builders and other distributors. Since acquiring the company in 1998, Pfingsten has added onto Norcraft twice. Saunders Karp and Trimaran will bring in Mark Buller as the new chief executive officer of the company.

Fairmont privatizes restaurant business for $95m
Anaheim, California-based private investment firm Fairmont Capital purchased Garden Fresh Restaurant Corp, which operates two chains of restaurants, in a privatization valued at approximately $95m. Fairmont has agreed to pay $16.35 per share for the company, a 48.9 per cent premium from Monday’s close at $10.98.

Garden Fresh operates the Souplantation and Sweet Tomatoes chain of restaurants. The company owns 95 restaurants, primarily in the Western US. The restaurants offer buffetstyle salads and other healthy options. For the nine months ended June 30 2003, net sales increased two per cent to $162.8m. The company is led by Michael Mack, who serves as president and chief executive officer.

TA Associates takes flight with Eagle investment
Boston-based private equity firm TA Associates has completed a $95m cash investment in Eagle Test Systems. Funding for the transaction comes from three of TA’s funds: TA IX ($2bn), TA/Atlantic and Pacific IV ($500m), and the TA Subordinated Debt Fund ($500m). The bulk of the investment will be redeemed in convertible preferred stock.

Eagle designs, manufactures and distributes test systems for the analog, mixed signal and wireless semiconductor industry. The company has offices in the US, Europe and Asia. According to Michael Child, a TA managing director, Eagle last year grew more than 50 per cent, making it an attractive buy for the firm.

Gryphon agrees coffee deal
San Francisco-based private equity firm Gryphon Investors has agreed to buy the Eight O’Clock Coffee division from the Great Atlantic & Pacific Tea Company in a deal worth at least $107.5m.

The sale is part of a recent sell-off by the A&P supermarket chain in an effort to decrease debt and reduce operating costs. After the completion of the transaction, A&P will have made approximately $285m from selling various assets, according to the company. Gryphon will offer an initial $107.5m up front in cash and a note for up to $20m, which will be based on the future performance of the business.

A&P is one of the oldest supermarket chains in the US. It operates 643 stores in 11 states, Washington DC, and Ontario, Canada. Its brand names include The Food Emporium, A&P and Super Fresh.

Jordan acquires Invensys metering assets
New York-based investment firm The Jordan Company has acquired the utility metering division of British engineering and production technology company Invensys for $650m.

Jordan completed the deal through its Resolute Fund. Senior and subordinated debt financing was provided by investment banks Credit Suisse First Boston and Goldman Sachs.

Invensys Metering Systems manufactures and sells gas, electric and heat metering and utility communication systems. For the fiscal year ended March 31, 2003, the company had revenues of $505m. The acquisition was completed through a holding company called IMS Meters Holdings.

This is Jordan’s second deal since closing the Resolute Fund in October 2002 on $1.5bn. In January, the firm acquired electrical contact and metal stamping company Precision Products Sector from Cookson Group for an undisclosed sum. The division reported 2002 revenues of $100m.

The Resolute fund was the first time the firm tapped capital through a limited partnership. Jordan had previously drawn capital from its partners and from a publicly traded entity on the London Stock Exchange called J.Z. Equity Partners.

Crescent exits healthcare IT business
Atlanta-based private equity firm Crescent Capital Investments is selling healthcare IT services portfolio company Medifax-EDISM to WebMD for $280m.

Crescent will retain Medifax’s Pharmacy Services Division. WebMD will acquire the remainder of the company through a transaction involving cash and assumed liability.

“We are proud of our association with Medifax and its management team,” said Crescent executive director Charlie Ogburn in a statement. “In addition, we are pleased to achieve a profitable exit transaction for our investors, particularly in the difficult private equity environment of the last two years.”

Medifax provides healthcare IT that includes real-time medical eligibility transaction and other claims management services. The company works with hospitals, medical centers, physician practices and other medical organizations in the US.

Crescent Capital Investments, founded in 1997, is the US private equity arm of Bahrain-based First Islamic Investment Bank, which has assets of more than $500m.

Riverlake acquires SPX unit
Chicago and Portland-based private equity firm Riverlake Partners has acquired the stock equipment division of industrial and technical systems company SPX Corp. Terms of the deal were not disclosed.

The stock equipment division provides bulk material handling systems. The company specialises in developing feed and handling systems for the coal industry. The company has annual revenues of approximately $50m.

This is Riverlake’s first acquisition since it announced a first close of $15m on its debut fund in May. The firm hopes to raise $25m by the end of the year. Riverlake intends to focus on companies in the lower middle market in traditional businesses. Its LPs are primarily individual investors who have previously co-invested with Riverlake’s principals.

Riverlake was founded earlier this year by Erik Krieger, former chairman of Pacific Crest Securities, and Jim Lawson, founder of Lincoln Partners. The firm focuses on buying non-core divisions of Fortune 1000 companies as well as family-owned businesses. It focuses on manufacturers, distributors, and service businesses. The firm seeks control positions in companies with annual revenues between $15m and $100m.

RoundTable wins medical devices auction
Illinois-based healthcare investment specialist RoundTable Healthcare Partners has agreed to acquire Argon Medical Devices division of Maxxim Medical after it won a bankruptcy auction over Lightyear Capital.

Strategic buyer Medline Industries will acquire the bulk of Maxxim Medical’s assets out of bankruptcy, while RoundTable will acquire Maxxim’s vascular products division, according to a press release.

Maxxim Medical, which has been operating under Chapter 11 bankruptcy protection since February, had been scheduled to go to Lightyear Capital in September when the firm emerged as a stalking horse candidate for the company’s assets. At the end of the bankruptcy proceedings, there was a final auction in which RoundTable outbid Lightyear, according to Todd Warnock, a founding partner of RoundTable Healthcare partners. The vascular products division makes instruments designed for vascular surgeries. The products are typically sold in “kits,” which are a set of instruments designed for a specific surgery. The division, known as Argon Medical Devices, operated as a standalone entity within Maxxim Medical. “Argon being owned by Maxxim compromised its ability to deal with other customers outside of Maxxim,” Warnock said. “It’s a wellknown brand name and a very stable business.”

Funds & Buyside

New York Life closes $475m mezzanine fund
New York Life Investment Management (NYLIM) announced the final close on its $475m mezzanine fund.

The capital was raised from 11 institutional investors, whose identities NYLIM did not disclose, and will be invested exclusively in mezzanine transactions. The fund will be managed by NYLIM’s affiliate, New York Life Capital Partners, which currently manages more than $3bn in assets, according to a statement.

“This fund is a successful validation of New York Life Capital Partners’ core partner strategy, as we significantly exceeded our original target amount of $400m despite the challenging fundraising environment,” said NYLIM chairman and chief executive officer Gary Wendlandt, in the statement.

SEC hedge fund rules to have ‘little impact’ on private equity
The SEC’s recommended rules for hedge funds, including registration with the commission, should have little effect on the private equity industry, according to experts. The report recommends that any rules handed down should be limited to hedge funds and exclude private equity and venture capital funds.

Under the current rules, hedge funds and private equity funds are not forced to register as investment advisers because the funds they manage are considered one client, no matter how many people or institutions are invested in them. Under the Investment Advisor Act of 1940, any firm with fewer than 15 clients does not need to register. The new report suggests that hedge funds may be forced to register if they have more than 15 investors, while private equity and venture capital firms would still be able to use the exemption.

“It looks like the effect is that, in essence, there would be no impact on the private equity community,” Jedd Wider, a partner at law firm Orrick, Herrington & Sutcliffe, said. “Registration requirements that relate specifically to hedge funds over a specified asset level that are required to register would not apply to the private equity fund community.” “This is good news for private equity funds,” Elizabeth Fries, a partner in Goodwin Procter’s Boston office, said. “The SEC is beginning to recognize that not all private funds are the same.”

Guidance, Navis close $86m Islamic Fund
Asia Falls Church, Virginia-based financial services company Guidance Financial Group, in conjunction with Malaysia-based private fund manager Navis Capital Partners, have closed an Islamic private equity fund based in Asia on $86m.

The Islamic fund is the first of its kind to be offered in Asia, said Hasnita Hashim, Guidance’s head of institutional business and product development. It is geared toward Islamic investors in the Persian Gulf and Southeast Asia, and makes acquisitions of marketleading enterprises in well-established industries throughout Asia through management buyouts, management buyins, restructurings and recapitalizations. Fund investments are made by Navis, which was established in 1998 by former senior executives of The Boston Consulting Group.

CAI Capital closes third fund on C$375m
Toronto-based private equity fund CAI Capital Management closed its third fund on C$375m ($278m). The fund, CAI III, will target opportunities in Canada and the US, according to a press release. The firm’s second fund was closed in 1999 on C$195m.

Limited partners in CAI’s latest fund include institutions from Canada and the US, including most of the major Canadian pension funds. Approximately 75 per cent of the fund’s LPs are Canadian institutions. The fund also has a group of 40 ‘special investors’. They are leaders from business, government and academia, who invest in the group’s funds and also help identify investment opportunities and improve portfolio company performance.

Angelo Gordon closes second fund on $150m
New York-based alternative asset manager Angelo, Gordon & Co announced it closed its second private equity fund on $150m.

The fund will focus on smaller buyouts, distressed situations and buying divisions of companies, according to a press release. The firm’s first fund closed in 2000 on $50m. The fund will invest in companies with under $150m in market capitalization Marsha Roth, managing director and director of marketing at Angelo Gordon, said. She added that the firm generates deal flow from the firm’s partners and other lines of business, which employs approximately 50 analysts.

Prism Capital holds first mezz close at $40m
Chicago-based Prism Capital has held a first close of its debut mezzanine fund on $40m. The Prism Mezzanine Fund has a final target of $120m, according to a press release. Prism Mezzanine, which is also an SBIC investor, hopes to provide mezzanine debt to Midwestern industrial companies with $20m to $100m in sales. The fund will target transactions requiring $2m to $7m in mezzanine finance to support acquisitions, management buyouts and recapitalizations. The fund will assist private equity firms in their transactions or invest directly in businesses seeking capital.

“We exist to serve companies in traditional industries that need capital beyond the level of senior debt provided by their banks,” Robert Finkel, a managing partner of Prism Mezzanine, said in the statement.

Lehman Brothers closes $300m venture capital fund
New York-based investment banking giant Lehman Brothers closed its Lehman Brothers Venture Partners 2003 fund on $300m.

The fund will target technology companies in North America. Investors include the Canada Pension Plan Investment Board (CPP Investment Board), the Commonwealth of Pennsylvania Public School Employees’ Retirement System (PSERS), Lehman Brothers and Lehman Brothers’ employees.

“Lehman Brothers Venture Partners 2003 is a continuation of a well-established venture investment program that focuses on commercialization of technology-based solutions and services,” said Tom Banahan, head of Lehman Brothers’ venture capital business, in a statement.

New York City Retirement Systems to invest $175m in first-timers
New York City Retirement Systems announced it intends to invest $175m in small, first-time private equity funds with a particular emphasis on those run by women or minorities.

The pension plans to invest in firms raising debut funds with a target of $200m or less, according to a press release. Candidate funds have been asked to submit a brief description of the opportunities they see, their track records, networks of contacts and descriptions of demonstrated experience and skills to execute their planned strategy.


Chartwell co-founder Berman leaves over improper advance
Chartwell Investments’ cofounder and president Todd Berman has quit the firm after his partners discovered he had taken more than $2m from the private equity firm’s management company for personal use, according to Bloomberg.

Berman resigned after acknowledging he took the advance, which violated the firm’s partnership agreement. Berman, a former Oppenheimer and Allen & Co. investment banker, founded the firm in 1992 with Michael Shein, a former banker at Goldman Sachs.

Sevin Rosen Funds announces two partner promotions
Dallas-based venture capital firm Sevin Rosen Funds promoted Nick Sturiale to Sturiale, who will work out of the firm’s Palo Alto, California office, joined Sevin Rosen in 1999 as a senior associate, and was named partner in 2001. He had been affiliated as an executive with two Sevin Rosen Funds portfolio companies, Candescent Technologies and Timbre Technologies, since 1992. Sturiale has more than 12 years’ experience in enterprise software, semiconductors and flat panel displays, in addition to four years experience in early-stage venture capital.

Velidi has been a senior associate in Sevin Rosen’s Dallas office since 2001. He joined the firm after more than 12 years in high-tech marketing in semiconductor and networking industries, including stints at Texas Instruments spin-off Crosspan Networks, Nortel, and start-up Xybridge.

HLM Venture Partners hires former CSFB banker
Boston-based venture capital firm HLM Venture Partners has brought in Russell Ray as a general partner. Ray previously worked at Credit Suisse First Boston as the global co-head of health care investment banking.

At HLM, Ray will focus on life sciences and pharmaceutical companies, an area of investment banking in which he has specialized for 20 years, according to the statement. He will also assist HLM’s current portfolio companies with financing, partnering and liquidity strategies.

New MD at Investor Growth Capital
New York-based Investor Growth Capital, the venture capital and private equity advisory group owned by Investor AB of Sweden, hired Noah Walley as a managing director.

Walley previously spent five years as a general partner at Morgan Stanley Venture Partners in New York. Prior to Morgan Stanley, Walley worked for the venture capital firms of Bachow & Associates and Desai Capital Management.

Questor promotes Janitz to co-managing principal
Southfield, Michigan-based private equity firm Questor Management has named John Janitz co-managing principal. Janitz will co-lead the firm with Questor managing principal Jay Alix.

“Janitz is an experienced executive with a proven track record of success in a variety of industries,” Alix said in a statement. “He has demonstrated his mettle at a number of Fortune 100 companies, most recently as president and chief operating officer of Textron, a $13bn revenue multi-industry concern.”

Questor has also named Dominick Schiano managing director responsible for monitoring and improving the firm’s portfolio companies. Schiano joins the firm from Textron, where he was an executive vice president and general manager of the company’s threaded fastener group, which generated $1bn in annual revenue. He also served as chief financial officer of the company’s fastening systems and automotive businesses.

ILPA selects new board lineup
The Institutional Limited Partners Association (ILPA), a trade organization comprised of the major backers of private equity funds, selected a new lineup of board members at its annual meeting earlier this month.

Ken Fish, a senior investment officer with GIC Special Investments, the private equity group associated with the government of Singapore, was named treasurer of ILPA, replacing Mark Barnard of the Howard Hughes Medical Institute.

Mark Wiseman, director of the Ontario Teachers’ Merchant Bank, was named chair of the program committee, replacing Kevin Kester of Colorado’s Public Employees’ Retirement Association.

Jeff Sharpe, of Lockheed Martin Investment Management Company, was reelected secretary of ILPA by its members. Two ILPA members were elected ‘atlarge’ members at the conference – Raul Diaz of Knight Foundation, and John Hsuan of Pepperdine University’s treasurers’ office.

Duo to set up Cogent New York office
Dallas-based private equity investment advisory firm Cogent Partners announced it appointed William Murphy and Patrick Shattenkirk managing directors. The two will establish a new office in New York for the firm, according to a press release.

Murphy joins the firm from Salomon Smith Barney, where he held senior positions in the private equity and real estate groups. In the private equity group, Murphy led new product development and provided liquidity through secondary sales and securitization of private equity portfolios.

Shattenkirk joins the firm from Deutsche Bank, where he was a director in the private equity group. While there, he serviced institutional investor relationships and provided private equity consulting services for limited partners and general partners.

Bush retires as Carlyle advisor
Former US president George Bush has retired as a senior advisor to The Carlyle Group, a spokesperson for the private equity firm confirmed. Bush, who primarily helped the investment firm raise capital, retired in October. Carlyle did not announce the move, but changed its website to reflect the former president’s departure.

“His next birthday is 80, and he has decided to ratchet back on business activities,” the spokesperson, Chris Ullman, said. “We have been pleased with our relationship with him and honoured to have been affiliated with him.”

Although former President Bush’s role at Carlyle was limited, his relationship with the firm became among the better-known facts about the firm. Some political observers criticised the firm for exerting undue influence over the current presidential administration.

A source close to the firm said Bush’s decision to leave was not related to Carlyle’s public image. “If that were the case he would have stepped down two years ago,” the source said.

Departures at Wisconsin Alternative Investment
The State of Wisconsin Investment Board (SWIB) has accepted the resignations of two alternative investment and private equity managers recently and merged its private equity and real estate investment areas.

Franz Pool, the board’s managing director of alternative investments, and Jon Vanderploeg, a private equity portfolio manager, both resigned in September.

The board merged its real estate and private equity investment areas into a private markets group that is led by Bob Severance, who was previously a managing director of the alternative investments area. The board is also in discussions with Bear Stearns, the investment bank, to help conduct due diligence on private equity investment, according to the article.

The board manages about $2.1bn in alternative investments, most of which is in private equity. Two-thirds of that money is invested in funds and one-third is tied up through direct placements.